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Mr Ignatyev told the President that, according to Central Bank forecasts, the rouble’s real effective exchange rate could strengthen by three percent in 2008.

Mr Ignatyev said that major additional budget spending decisions, increases in regulated electricity, gas and housing and municipal services prices, and oil prices above $53 per barrel, could all make the rouble’s real effective exchange rate higher than planned. Mr Ignatyev said that the Central Bank would continue its policy of maintaining a managed floating exchange rate for the rouble.

Mr Ignatyev informed the President that inflation stands at 7.4 percent this year and noted that reducing inflation is the main objective of the balance of payments indicators and monetary programme drafted by the Central Bank for the coming three years. Inflation should be down to 7 percent in 2008 and down to 6 percent by 2010.