inflation are above the target. this is about demand - side pressure, or to be more precise, about a considerable gap between the current level of demand and the potential of supply to meet such demand. it is not always possible to build up production capacities quickly. supply may adjust to demand more slowly due to limited capacities, a shortage of components and raw materials, logistics bottlenecks, and — with regard to the economy in general — due to the lack of a sufficient number of workers. it may take a long time to overcome these restrictions and ramp up supply. until these problems are solved, elevated demand will not turn into higher consumption, but will only translate into an increase in prices for those consumers who will be ready — or simply forced — to buy products at higher prices. all other consumers will be unable to purchase more expensive goods. this is exactly what we are observing now. the situation with cars is probably the most telling example. 1 / 4 bis central bankers'speeches excess demand, which cannot be met through an expansion of production, is not a source of additional economic growth. in such an environment, producers have the opportunity to easily pass their extra costs on to consumers. hence, this discourages companies to enhance production and labour efficiency. today, demand is fuelled by high inflation expectations. after the decrease in august and september, households ’ and businesses ’ inflation expectations are rising anew and have already returned to the peaks recorded in recent years. the longer inflation expectations stay elevated, the more we need to tighten our policy in order to bring inflation back to the target. we have considerably raised our inflation forecast for this year, as compared to july, namely to 7. 4 – 7. 9 %. we have also increased the forecast range of the annual average key rate for the next year by 1. 3 percentage points, as compared to july. considering such policy, inflation will decline to 4. 0 – 4. 5 % next year. i will now speak of the economic situation. except oil production subject to the opec + cuts, the economy generally bounced back to its long - term growth trends in the second quarter and even exceeded them in a number of industries. growth slowed down in the third quarter, which is evidence that the recovery had completed. it should be noted that the third quarter gdp was affected by a decrease in harvest and the worsened epizootic situation. excluding agriculture, we estimate that gdp growth quarter - on - quarter was positive. consumer demand remains the

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, 22 october 2021. * * * good afternoon, w e made a decision to raise the key rate by 75 basis points to 7. 50 % per annum. this is a significant increase and, obviously, this is not a fine - tuning exercise. this decision is driven not only by the current pace of inflation, but primarily by high inflation expectations and a considerable revision of the forecast compared to july. inflation will be going down from a higher point than we assumed. this will require a greater tightening of monetary policy than we planned in our july forecast and expected in september. i will now explain in detail why we have made this decision. first of all, i would like to talk of inflation. in august and especially in september, inflation significantly exceeded our forecast. during the first weeks of october, we could see no signs of a weakening of inflationary pressure. although the sudden surge in inflation that occurred in september was provoked predominantly by temporary factors, we consider this situation as potentially dangerous as it affects inflation expectations. i would like to remind you that inflation soared in september due to a smaller vegetable harvest and higher costs in livestock production. meat, milk, and vegetables are all the so - called marker products. when prices for marker products surge, even if their share in the consumer basket is rather small, this might speed up inflation expectations. this is what we observed in sugar and sunflower oil prices last year. today, inflation expectations are already high, and this impact might be even stronger. inflationary pressure is still spurred by higher prices in global markets. recently, prices for food products, coal, non - ferrous metals, and especially natural gas continued to trend upwards. increased gas prices are pushing up prices for nitrogen fertilisers, which might ultimately become an additional driver of pressure on prices in food markets put by agricultural enterprises ’ costs. however, there are also goods demonstrating a stabilisation of prices and even their adjustment downwards. these are steel, iron ore, precious metals, and lumber. nonetheless, we cannot be confident yet about how steady these trends are. global markets remain a source of elevated inflation risks. however, the question is not only and not so much about transitory factors. it is more important that the indicators of steady