Alexey Kudrin, a former Finance Minister of Russian and the current head of the Civil Initiatives Committee, a NGO promoting development of civil society in Russia, named five current misconceptions about the ways of Russia’s economy development, Kommersant newspaper reports on Monday.
The first myth is that inflation I Russia is of monetary nature, therefore, it is pointless to regulate it by means of monetary policy, and Central Bank should abandon targeting of inflation because it can be handled by restricting monopoly tariffs. The second myth is that economic growth is constrained by a lack of money, therefore, it is possible to stimulate it through the expansion of money supply.
The third misconception is the belief that economic growth can be accelerated, using the country's significant spare production capacity through monetary easing – lower interest rates. The fourth myth is that an increase in GDP growth rate may be prompted by some analog of “quantitative easing” policy – the provision of additional liquidity on favorable terms.
The fifth: the return of Central Bank to active monetary policy – up to fixing the exchange rate at the undervalued level – will promote growth due to the removal of currency risks from Russian companies, enhancing competitive positions of exporters and companies focused on import substitution.
