The Impact of Central Bank's Monetary Policy on Economic Conjuncture of Russian Federation

In this paper, we investigate the impact of Central Bank's monetary policy on economic conjuncture of the Russian Federation. This research contributes to the optimization of the monetary policy in the current economic conditions. In turn, this will facilitate overcoming the crisis and entering the path of sustainable growth. In addition, a sharp decline in international reserves of the Russian Federation makes the monetary policy a key tool to stimulate the economy. The aim of the work was to determine the degree of the monetary policy impact on the economic conjuncture during the current economic crisis. For that purpose, we built a vector autoregression model, which identified the quantitative relationship between economic indicators. The paper also examines theoretical aspects of the monetary policy and its impact on the economic conjuncture; it analyzes the monetary policy of the Central Bank of the Russian Federation in the period of 2007-2015, the occurring effects are illustrated with the IS-LM-BP model. The work revealed that the changing policy of the Bank of Russia in 2014 (the transition to a free ruble exchange rate and an increase of the interest rate) has led to a greater drop in key economic indicators than in case of the continuing policy of the currency band. At the same time a negative effect of inflation on the short-term growth rate was identified being the evidence in favor of the inflation targeting policy, which is now the main priority of the Bank of Russia.