ruble exchange rate dynamics. however, sustainable oil price reduction comparable to last year ’ s patterns does not seem feasible. the oil market will remain volatile, with oil prices changing in both directions. oil price fluctuations are followed by fluctuations in the ruble exchange rate. however, one - way change in the ruble exchange rate has stopped. this means that the exchange rate impact on the inflation will gradually wear out. the restraining influence of low economic activity will begin to fully impact inflation dynamics in the second half of 2015. by this time, the effect of temporary factors, such as the depreciation of the ruble and foreign trade restrictions that have led to acceleration in consumer prices growth, will be exhausted. as we have already noted, inflation will reach its peak in 2015 q2, and afterwards it is forecast to fall. in march 2016, inflation will approximate to 9 % before falling down to 4 % in the medium run. such inflation dynamics will be accompanied by economic recovery. the bottom of economic recession is expected in 2016 q1, later on the economy will start growing on a quarterly basis. by that time the initial adjustment of the economy to the new environment will be over. higher global oil prices, the economic recovery of trade partner countries, and the formation bis central bankers ’ speeches of new sources of financing will also contribute to this growth. in 2017, economic recovery is expected to exceed 6 %. we shall continue to regularly update our forecast by monitoring movements of a wide range of indicators taking into account not only annual inflation dynamics, but also quarterly, monthly and weekly ones. if new pro - inflationary factors do not appear and inflation decelerates according to our forecast, we shall continue cutting the key rate. in conclusion, i ’ d like to note that although the current economic slowdown is of both structural and cyclical nature, structural factors and the need to create new growth sources still play a major role. this means that monetary policy measures are not sufficient to solve all the problems facing the economy. special efforts are needed to promote new investments in the economy, improve business climate, increase the mobility of labour and its skills, enhance the efficiency of natural monopolies and government expenditure, improve state governance, and develop infrastructure and logistics. only these efforts will ensure sustained long - term economic growth based on increasing productivity and economic structural changes. bis central bankers ’ speeches

lesser extent, has increased. these markets could potentially become more volatile, however. in broad terms, what does all this mean for global growth? in our view, it will not be stable. average growth rates will be lower than in the early 2000s. the main trend we will see in the coming years will be slow economic recovery and the leading central banks taking a tighter policy stance. this will include increased interest rates and curtailed balances. for financial markets, these dynamics bring about two contradictory trends. on the one hand, economic growth has a positive impact on financial markets and risk appetite. on the other hand, increased interest rates are cooling the markets. therefore, despite the overall stabilisation, there is a high probability of financial market volatility. what does all this mean for the russian economy? our economy will be bolstered by external demand to a lesser extent and will be sensitive to external volatility. although, as recent years have shown, our economy has learned to adapt to external shocks, there are nevertheless a host of internal factors that leave us rather exposed. these include low economic diversification, insufficient flexibility of institutions and rules, a weak competitive environment ( where new companies find it hard to enter the market and those lagging behind economically continue to do so for a long time ). as a result, even given the potential for growth ( which, as you know, the central bank estimates at 1. 5 - 2 % ) there will potentially be significant fluctuations in output in the coming years. therefore, there is an urgent need for structural changes that will raise the bar of potential growth above 1. 5 - 2 % and make it sustainable. the financial sphere is also in need of such structural changes. what policy response are we seeing in the face of these challenges in the financial sphere? 2 / 11 bis central bankers'speeches above all, focus should be on maximum flexibility. certainly, the floating rate should be upheld. it is crucial to adjust and constantly re - adjust regulation in established and new spheres based on the principles of proportionality to risks. since rules quickly become outdated, it is important to gradually transition from management guided by rules to management by principles. greater attention should be paid to systemic problems and risks, not just to the stability of individual institutions. adopting the principle of countercyclicality, using macroprudential tools. early warning of problems both in the system as a whole and in individual institutions. greater transparency in the financial sphere.