Inflation expectations and their role in maintaining price stability by the Bank of Russia

The monetary policy in Russia is going through a crisis period due to overheated demand and increased inflationary expectations among the population and businesses. In this regard, it is particularly important to identify areas that can improve the effectiveness of the Bank of Russia's efforts to achieve price stability. The purpose of this study is to identify the essence of inflationary expectations as a financial category and determine their role in returning inflation to its target level. To achieve this goal, the authors used theoretical and empirical methods of scientific inquiry, as well as analyzed the works of financial researchers and statistical data from the Bank of Russia. Based on the results of the analysis, it was established that inflation expectations are a specific financial category that contains a set of subjective behavioral characteristics of economic agents regarding their perception and forecasts of the price level. The Bank of Russia uses inflation expectations to draw conclusions about the effectiveness of its monetary policy measures. The Central Bank influences the expectations of economic agents using a non-traditional tool: communications and communication policy, which aims at explaining the logic of decisions to change the key interest rate, increasing transparency in the Bank of Russia's operations, and signaling the future direction of monetary policy through inflation expectations. Based on the analysis for inflation dynamics and inflation expectations, the authors concluded that at the current stage, the key rate and communications do not fully affect price dynamics. The authors see the solution to this problem in developing communication policies and expanding opportunities for financial education for citizens and businesses. 

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