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Russia' money supply up 49% in 2006, driving inflation

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The growth in Russia's money supply in 2006 is estimated at 49%, according to a Finance Ministry report to the government made available Tuesday.
MOSCOW, January 16 (RIA Novosti) - The growth in Russia's money supply in 2006 is estimated at 49%, according to a Finance Ministry report to the government made available Tuesday.

The report, prepared in conjunction with the economics and energy ministries, the national financial watchdog, and the Central Bank, says money supply growth last year was higher than the 2005 level of 38.6%.

The ministry said the faster growth in money supply during the second half of 2006 pushed up the underlying inflation rate by the end of the year, and is expected to boost it further in the first quarter of 2007.

"Despite growing monetary demand, the accelerated growth in money supply in 2006 is now contributing to higher inflationary pressure on the economy, while significantly raising the risk of failing to meet the 2007 inflation target," the report says.

A forecast for the country's social and economic development until 2009 prepared by the Finance Ministry projects consumer price inflation at 6.5%-8% in 2007, 4.5-6% in 2008, and 4-5.5% in 2009.

However, late last year the economics ministry gave higher consumer price growth projections of 7% for 2008, and 6.8% for 2009. According to the ministry, inflation will slow down to 6.5% in 2010.

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