Two months ago, we released a consultation paper on floating interest rates and discussed it with the market community. The findings of this discussion are as follows. It would be unreasonable to prohibit floating interest rates completely since this reduces opportunities to expand lending, especially given that banks have increasingly more current liabilities and increasingly more non-current assets. Floating interest rates really help address this mismatch. Nonetheless, I would like to emphasise that in the first place banks still need to expand the share of long-term funding, for instance, through bonds. However, unrestricted access to floating interest rates should only be provided to ‘qualified’ borrowers, that is, the highest-income people who are well aware of inherent risks they accept taking out very large loans. In contrast, small loans should be issued on very clear terms, and floating interest rates in this case should be prohibited, in our opinion. Floating interest rates should be available in the absolute majority of loan types (including in mortgage lending). However, the range of possible changes in floating interest rates or loan maturities should be limited. Let’s say that this should be no more than a third of an interest rate or no more than a fourth of a loan maturity. We still need to discuss these parameters in greater detail. People would thus be able to measure their risks under various scenarios and make a wellinformed decision. We believe that the caps setting the maximum amount of a small loan should be established taking into account regional specifics.

Some countries are experiencing only a temporary surge in inflation and might just wait out until it ends. Contrastingly, other economies, including Russia, are facing a rise in inflation expectations. Therefore, no response from central banks could undoubtedly exacerbate the inflationary spiral, while the effect of accommodative policies on growth has been mostly exhausted already. Concerns about inflation are aggravated by worries about a faster tightening of global financial conditions. Largest economies’ central banks are now close to the limit in their ultraaccommodative policies pursued for multiple years. If the surge in inflation is not temporary and persists, central banks will be forced to respond. If they tighten their policies, this will cause capital outflows from emerging markets. Rising volatility will certainly affect the economy. Changes in the labour market also speed up inflation. Moreover, this does not seem to be a temporary factor. As the development of digital services, remote work, and online trade has accelerated, the demand for some professions is declining, while the demand for others is growing. Therefore, unemployment that has risen during the crisis period might be structural in nature: staff shortages in some sectors might be coupled with higher unemployment rates in other industries. This might induce proinflationary pressure, even if unemployment stays close to prepandemic rates. What does this mean for our monetary policy? 1/7  BIS central bankers' speeches  Firstly, Russia is one of the countries where the economy is bouncing back fast and has almost reached its pre-crisis level.