Bank of Russia at the Cross-roads: Should Monetary Policy Be Eased?

Abstract

Recent slowdown of economic growth forces Russian political authorities to seek for policy measures to support economic activity, and monetary expansion is considered as one of possible alternatives. During the post-crisis period monetary authorities of advanced economies have relied heavily on different sorts of monetary stimulus. Thus it is sometimes argued that Russia should better use such kind of experience and shift to aggressive monetary easing. This view is mostly wrong since it demonstrates misunderstanding of the goals of the monetary easing policy implemented in advanced economies and also ignores the differences between Russia and advanced countries with respect to macroeconomic conditions.