At the same time, while anti-crisis budget measures were particularly important during the period of restrictions and will be curtailed in future, accommodative monetary policy will continue to operate next year to support the Russian economy. I would also like to emphasise that both fiscal and monetary policies play a countercyclical role, that is, they address the issue of overcoming the downturn and bringing the economy back to its potential. This is certainly a top-priority task in the current situation, yet it is critical to remember what is absolutely essential for sustainable long-term development and an increase in economic potential, labour productivity and, accordingly, households’ incomes. To tackle this task, we need incentives to increase private investments and develop private initiatives and should enhance the flexibility of the labour market, which primarily depends on the business climate and other structural factors. The level of our economic potential after the pandemic and how quickly the economy will regain it are crucial for both our macroeconomic forecast and monetary policy. As you know, this uncertainty of supply- and demand-side factors is a key point in our forecast scenarios. They are presented in the draft Monetary Policy Guidelines for 2021– 2023 published last week. We are going to update our forecast estimates following the Board of Directors’ meeting scheduled for October. Yet, our approaches to the set of scenarios and key forecast assumptions in the scenarios will remain unchanged. Winding up, I would like to make my traditional comments on monetary policy prospects.

Elvira Nabiullina: Review of recent inflation developments in Russia and economic outlook Statement by Ms Elvira Nabiullina, Governor of the Bank of Russia, in the follow-up to the Board of Directors meeting, Moscow, 18 September 2020. * * * Today, the Bank of Russia has decided to maintain the key rate at 4.25% per annum. Why have we made this decision, although we do see room to further ease monetary policy under the baseline scenario? Firstly, in recent months inflation has been slightly higher than expected. This trend has been driven by both a rapid revival of consumer demand after the lockdown period and the weakening of the ruble in July — August. We estimate that short-term proinflationary risks have slightly risen again, while disinflationary risks somewhat decreased. However, disinflationary risks still prevail in the medium run. Secondly, the external environment has become more volatile. There are rising concerns about the pace and sustainability of the recovery in the global economy, especially considering that in recent weeks the pandemic situation has worsened to a certain extent in a number of countries. Geopolitical risks have intensified. Moreover, we also considered the following factors when making our decisions. Inflation expectations remain elevated, affected by price and exchange rate movements and the persistent uncertainty over further developments. The companies we survey are reporting rises in costs due to higher input prices. Moreover, they incur extra costs since they need to comply with the sanitary and epidemiological requirements. Concurrently, businesses assess demand for their products as weak.