How Credible Is the Central Bank of Russia to Russian Households?

Abstract

The article examines the degree of public trust in the Central Bank of Russia after the transition to inflation targeting. For this purpose, the author analyzes available data from inFOM consumer surveys of confidence in the Bank of Russia as a whole as well as in its inflation targets from 2014 to 2024. Public confidence in the Bank of Russia remained relatively high from 2014 to 2017 as inflation targeting was adopted, but the Bank became far less credible to households from 2019 to 2022 because they did not believe the inflation target of 4% was achievable by the end of the current year or over the medium term. This is probably due to their lack of awareness that the Bank’s principal goal is price stability even though they are actually experiencing high inflation. The households surveyed think that government authorities are largely responsible for controlling inflation. Furthermore, consumers do not take notice of the information provided by the Central Bank of Russia. Using news articles from Russian media, posts from news communities on the VKontakte social network, and Google Trends search queries, the author shows that consumers who ignore information about the Bank’s policy are at a serious disadvantage when there is economic uncertainty. The discrepancy between the inflation expectations of consumers and professional forecasters diminishes as the volume of information tied to the phrase “Bank of Russia” increases in media, social network posts, and online searches.