Creation of balance between factors affects inflation - CBA

By Trend

Recent analysis shows that a balance is gradually being struck between factors that increase and decrease inflation, Trend reports via the CBA.

"The decline in world food prices and the consequent relative easing of inflationary pressures in partner countries may have a mitigating effect on inflation. The slowdown in the world economy and the tightening of monetary policy in most countries also support this process. However, the possibility of a recession could cause significant changes in the external balances of many developing countries," the CBA said.

According to the source, domestic inflationary risks are primarily associated with the excessive expansion of aggregate demand. Effective coordination of fiscal and monetary policies to limit the transformation of rising expenditures into inflation will continue, and necessary decisions will be taken to create a stable balance of aggregate demand and supply.

In addition, the CBA will ensure a monetary environment that limits the excessive expansion of aggregate demand until inflation enters the target range.

"Further decisions on the monetary policy and interest rate corridor will be made depending on the factors observed in the inflationary environment and the extent of expected changes in these factors. Further narrowing of the width of the interest rate corridor will be considered depending on the possibilities of impact of the new operational structure of the monetary policy on interest rates in the financial sector," the CBA said in a statement.