M2 money supply, defined by the Central Bank as total cash in circulation outside banks, plus ruble funds on accounts of resident non-financial organizations and individuals, stood at 10,702 billion rubles (about $414 billion) as of June 1 against 8,996 billion rubles ($348 billion) a year earlier, the CBR said.
Sergei Ignatyev, the CBR chief, said on June 7 a dramatic rise in capital inflow into Russia and the country's gold and foreign exchange reserves were the main reasons for the accelerated growth of money supply, a key factor exerting pressure on inflation.
Russia's Finance Ministry said the accelerated money supply growth had put into doubt the government's efforts to keep 2007 inflation from rising above 8%. However, the Central Bank and the government have so far said inflation will be kept within the projected band.
Inflation in Russia stood at 9% in 2006, down from 10.9% in 2005, according to the national statistics service.
