and helped set the economy on a recovery path. this year, the economy has returned to the pre - pandemic growth trajectory. the immediate task is to stage a switch from recovery to sustainable growth. in order to do this, it is necessary to overcome the negative effects of the pandemic, and above all, to deal with soaring inflation. this is the focus of our current policy, and this is why we are raising the key rate. what happened? why did price growth accelerate in russia and across the globe? last year ’ s anti - pandemic restrictions led to a drastic shrinkage of demand in most sectors. businesses suspended operations and purchases of raw materials and components. people did not buy tickets or holidays because of travel bans. when restrictions started to ease, demand was quick to recover. it was helped by loose monetary policies pursued by all central banks — to the effect that loans were increasingly affordable — and fiscal stimulus. however, a rebound in demand came with a change in its structure. for example, it spurred demand for telecommunications equipment as many people needed fast internet to work 1 / 4 bis central bankers'speeches remotely. supply, that is production, cannot quickly adjust to these changes. in these conditions, demand exceeds potential output and triggers an inevitable rise in prices. this true of many sectors. some central banks hold the view that this is a temporary situation and no monetary policy response is needed. those are the central banks of countries where inflation was very low for many years. their case is utterly different. we had also enjoyed low inflation, which only had lasted four years. but the current rate of inflation is double our target, and food inflation has unfortunately increased to double - digits. importantly, in this short period of close - to - target inflation, people ’ s perception of it remained unchanged. domestic inflation expectations — that is the way people perceive current inflation and what to expect in the future — is a reflection of peoples experience with the long years of high inflation. on the cusp of the pandemic, inflation expectations had just started to go down as we saw them approaching 4 %. the pandemic derailed that trend. inflation expectations this year have grown drastically to a five - year high. what does that mean in practice? it means that people rush to buy everything before prices grow, and are taking out a lot of loans. and that further fuels demand and inflation. whereas some central banks can afford to take a wait - and - see

directors showed that directors are not focusing on risk management. forty - five percent of directors surveyed said their organization did not have a formal enterprise risk management process - or any other formal method of identifying risk. an additional 19 percent said that they were not sure whether their company had a formal process for identifying risks. sound corporate governance is an essential element of a strong risk management process. governance involves many players, each with specific assigned responsibilities to ensure that the system as a whole is sufficient to support the business strategy and ensure the effectiveness of the systems of internal control. after enron : a survey for corporate directors, institute of internal auditors and national association of corporate directors, directors are not expected to understand every nuance of every line of business or to oversee every transaction. they can look to management for that. they do, however, have the responsibility to set the tone regarding their corporations'risk - taking and to oversee the internal control processes so that they can reasonably expect that their directives will be followed. they also have the responsibility to hire individuals who they believe have integrity and can exercise a high level of judgment and competence. in the light of recent events, i might add that directors have the further responsibility to periodically determine whether their initial assessment of management's integrity was correct. indeed, beyond legal requirements, boards of directors and managers of all firms should periodically test where they stand on ethical business practices. they should ask, for example, " are we getting by on technicalities, adhering to the letter but not the spirit of the law? are we compensating ourselves and others on the basis of contribution, or are we taking advantage of our positions? " risk management and internal controls boards of directors are responsible for ensuring that their organizations have an effective audit process and that internal controls are adequate for the nature and scope of their businesses. the reporting lines of the internal audit function should be such that the information that directors receive is impartial and not unduly influenced by management. internal audit is a key element of management's responsibility to validate the strength of internal controls. internal controls are the responsibility of line management. line managers must determine the level of risks they need to accept to run their businesses and to assure themselves that the combination of earnings, capital, and internal controls is sufficient to compensate for the risk exposures. supporting functions such as accounting, internal audit, risk management, credit review, compliance, and legal should independently monitor the control processes to ensure that they are