interest rate is a common mechanism in corporate lending, whereas it might involve risks in retail lending. in contrast to businesses, people are not always able to properly assess 3 / 7 bis central bankers'speeches their future risks and might agree to borrowings at interest rates that might rise. this is especially important for a mortgage loan which is the largest one taken out by people over their entire life and the most demanding one since people might lose housing if they fail to repay their mortgage loans. two months ago, we released a consultation paper on floating interest rates and discussed it with the market community. the findings of this discussion are as follows. it would be unreasonable to prohibit floating interest rates completely since this reduces opportunities to expand lending, especially given that banks have increasingly more current liabilities and increasingly more non - current assets. floating interest rates really help address this mismatch. nonetheless, i would like to emphasise that in the first place banks still need to expand the share of long - term funding, for instance, through bonds. however, unrestricted access to floating interest rates should only be provided to ‘ qualified ’ borrowers, that is, the highest - income people who are well aware of inherent risks they accept taking out very large loans. in contrast, small loans should be issued on very clear terms, and floating interest rates in this case should be prohibited, in our opinion. floating interest rates should be available in the absolute majority of loan types ( including in mortgage lending ). however, the range of possible changes in floating interest rates or loan maturities should be limited. let ’ s say that this should be no more than a third of an interest rate or no more than a fourth of a loan maturity. we still need to discuss these parameters in greater detail. people would thus be able to measure their risks under various scenarios and make a wellinformed decision. we believe that the caps setting the maximum amount of a small loan should be established taking into account regional specifics. this aspect also requires additional discussions. now, i would like to proceed from current risks to the trends in the financial sector. digitalisation might be an even more significant trend for finance than for the economy in general. actually, the financial sector has been extensively applying advanced technologies for a long time already. an ecosystem, which is the most powerful business model, is exactly the result of a fusion of technologies and finance. ecosystems have become so powerful that they now impact not only the development of and competition in the financial sector

a surge in the first two weeks of this year, they have dropped in recent weeks, though holding somewhat above the path that corresponds to our inflation target. moreover, we do not rule out that the deferred effects of the vat hike may manifest themselves in the months to come. it is also of note that in february, both monthly core inflation and most other indicators adjusted for volatile components and seasonality exceeded 4 % in annual terms. there is evidence that risks that prices of certain food products may grow at an elevated pace have decreased. in february, a decline was registered in prices of a number of products which had made a considerable contribution to acceleration of food inflation. furthermore, both domestic and external prices of main crops stopped growing in recent months. current harvest expectations for this year are favourable, which also limits risks in this part. petrol and diesel prices were comparatively stable in december - february, and even drifted down slightly in february. this constrained inflation acceleration. furthermore, the ruble appreciated in the opening months of the year ; this had a favourable effect on prices and inflation expectations. inflation expectations is the second factor we closely monitor. we had concerns about their 1 / 3 bis central bankers'speeches possible response to inflation acceleration. expectations of professional analysts remain anchored. analysts understand the temporary nature of this year ’ s inflation acceleration associated with one - off factors, in particular, the vat. therefore, as the bank of russia, they forecast a moderate increase in inflation in 2019 and expect inflation to come in at 4 % from next year onwards. households and businesses responded to inflation acceleration more pronouncedly. expectations of households rose from a historic low of 7. 8 % seen last april to 10. 4 % in january, that is returned to their mid - 2017 readings. businesses ’ price expectations also jumped considerably. however, household inflation expectations dropped to 9. 1 % as early as march. price expectations of businesses also declined. however, they both remain elevated. it is of special note that inflation expectations of households and businesses demonstrated last year that they remained unanchored. they follow current changes in prices, primarily petrol and food prices, and ruble exchange rate fluctuations. the third important factor we took into account is consumer demand. lending underpins consumption but slowing wage growth constrains a rise in demand. consumption growth slowed down after a short - term acceleration in november, which was likely associated with preemptive purchases of non - food goods in the run - up to the vat