As of end of April 2014, broad definition monetary base grew by 7% y/y and 0.9% m/m reaching RUB 9.43tn (USD 272bn), the report by the Central Bank of Russia (CBR) shows. The growth of the monetary base continued the stable downwards trend: declining from 11% y/y and 8.3% y/y seen in January and March, respectively.

Throughout 2013 broad monetary base was recovering from January’s 2013 14.5% drop and recorded 6.6% y/y increase as of end of December 2013.

Amount of cash in circulation, including balances in credit organizations for April grew by 6.4% y/y (vs. 7.3% y/y a in March) and as of May 1 2014 amounted to RUB 7.88tn.

Monetary easing from the CBR this year is highly unlikely as depreciating RUB is feeding inflationary pressures. In March amidst sharp RUB decline, the CBR temporarily increased the key interest rate from 5.5% to 7%, and then again to 7.5% in April. Previously, before the Ukrainian crisis, CBR’s inflation targets were already under pressure as RUB followed the trend of emerging currencies and weakened by about 8% in Jan-Feb 2014.

EconMin Alexei Ulyukaev most recently argued that CBR’s tight monetary policy is contributing to the economic slowdown. EconMin expressed hope that in the next BoD meeting of June 16 the key interest rate will be corrected downwards. This is seen as unlikely, given that both EconMin and FinMin expect to peak in May-June. In y/y terms the inflation rate reached 7.3% in April, away from the 5%-6% target set by the CBR.