IZHEVSK, August 7 (RIA Novosti) - Russia's finance minister warned Tuesday that money supply, which expanded 51% year-on-year as of August 1, could push inflation beyond the 2007 target level of 8%.
"This clearly exceeds our plans for money supply growth, and creates conditions for higher inflation than we had expected. But the Central Bank could still meet the target figures," Alexei Kudrin told journalists.
The minister said the Central Bank can use exchange rate policy and funds accumulated on its deposit accounts to keep inflation under control.
Kudrin said high money supply on the domestic market was caused by growth in international reserves due to an influx of foreign currency into the country. In turn, the influx has been fueled by soaring oil prices and a record-high private capital inflow, he said.
Sergei Ignatyev, the Central Bank's chairman, said in early July that net capital inflow hit $67 billion in January-June 2007, from $14 billion in the same period of last year.