directors. the bank of russia will make decisions on its further moves depending on the path of economic development and the trends of inflation and inflation expectations. baseline scenario i would like to remind you that the bank of russia updates its medium - term baseline forecast four times a year in the course of the board of directors ’ core meetings on the key rate. the forecast presented in the draft guidelines was released earlier following the meeting held on 23 july 2021, but this draft extends the forecast horizon to 2024. the key assumptions of the baseline scenario are as follows : ( 1 ) a gradual improvement of the pandemic situation worldwide owing to the progress of the vaccination, the development of the herd immunity, and the absence of new, more dangerous coronavirus strains ; ( 2 ) the continuing recovery of the global economy ; ( 3 ) debottlenecking the supply chain ; ( 4 ) phasing - out of stimulus measures in major economies beginning from 2021 h2 and timely normalisation of their monetary policies to prevent persistently rising inflationary pressure. after the accelerated recovery, the russian economy will slow down to its potential growth rate in 2022. taking into consideration the structural measures implemented by the government to boost the potential growth pace, it will probably edge up to 2 – 3 % a year over the forecast horizon. annual inflation will go down gradually from 2021 h2 as a result of the weakening impact of temporary factors and the effect of the earlier monetary policy decisions made by the bank of russia. given the actual price growth rate in 2021 h1, we expect that inflation will reach 5. 7 – 6. 2 % as of the end of the year. next year, inflation will slow down to 4. 0 – 4. 5 % and will stay close to the bank of russia ’ s 4 % target further on. the key rate will average 6 – 7 % p. a. next year and then return to its long - term neutral range estimated by the bank of russia at 5 – 6 % p. a. alternative scenarios nevertheless, there is still significant uncertainty about how the situation might be unfolding 2 / 4 bis central bankers'speeches in the future. seeking to pursue a robust monetary policy, the bank of russia considers three alternatives in its guidelines in addition to the baseline scenario. i would like to emphasise that the alternative scenarios are less probable than the baseline one. this year, the logic behind the alternative scenarios is based on the key possible factors in the external environment.

to its pre - pandemic growth path. the number of vacant jobs is at its peaks. high demand for labour resources is demonstrated by companies in construction and transport, a whole range of manufacturing enterprises, and in trade. these are the industries that started to bounce back earlier and were recovering faster and where demand exceeds prepandemic levels. a further expansion of output is possible through a restoration of the inflow of labour migrants, but — first of all — through an increase in labour productivity. this all means that after the rebound of the economy completes, it will develop more smoothly, at a more gradual pace, as compared to the recovery growth of output observed over the last 12 months. in a situation when companies experience a shortage of workers or components, monetary policy measures promoting demand will not increase output or consumption. for instance, if the demand for cars rises even more, this will not boost their output, when there are no parts, but will only increase the queues for them and speed up price growth. 1 / 3 bis central bankers'speeches as regards inflation, it is above the forecast rate, and inflation expectations remain high. in august, annual inflation was 6. 7 %. according to the steady indicators of inflation measuring the inflation rate without volatile components, inflationary pressure continued to considerably exceed our target in both august and early september. indeed, inflation is impacted by multiple factors that do not depend on our monetary policy. the most important of them are world commodity prices, the country ’ s fruit and vegetable harvest, and bottlenecks in global supply chains ( container shipments, microcircuit manufacture, etc. ). it has been stated recently that these factors should be completely ignored if monetary policy cannot influence them. this opinion leaves out one essential circumstance, namely, the fact that all these factors impact inflation expectations which, in turn, influence consumers ’ sentiment and behaviour. hence, they drive inflation across a wide range of products. higher inflation expectations boost demand and increase the extent of the pass - through of higher costs to consumers. as a result, companies have the opportunity to almost completely pass costs to prices and thereby maintain or even increase their profits, which in turn discourages them to take efforts in order to reduce costs and improve labour productivity. monetary policy should prevent the inflationary spiral from getting out of control. therefore, it should respond to transitory factors to the extent they transform into steady factors through higher inflation expectations. this is especially relevant when households ’ inflation expectations and