6 January 2022

New inflation wave to hit Russia soon – head of Matrix Capital

Russia is most likely in for a surge in inflation this or next month, according to the head of Moscow-based investment banking boutique Matrix Capital.

Pavel Teplukhin, general partner at Matrix, largely based his forecast on the role of inflationary psychology, an attitude that makes consumers buy more goods than usual in the expectation of price rises. This increases the velocity of money and thereby boosts inflation.

In Russia, inflation expectations of this kind were at five-year maximums in October and November, Teplukhin, who had been a prominent figure in organising the financial sector of post-Soviet Russia, told a news conference in Moscow in December.

Such anticipations of price hikes take about seven months to materialise in Russia, he said.

The combination of this and other factors (a money supply increase, for instance, normally takes about four months to produce inflation in Russia, according to Teplukhin), suggested that a new wave of inflation would hit Russia in January or February 2022, he argued.

The central bank is bound to react by raising the key rate in February, he said.

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