ИСТИНА

This paper analyses advantages and disadvantages of conquering inflation expectations by the Bank of Russia after the beginning of active inflation targeting. The reverse side of registered and expected inflation decreasing in Russia is a prolonged economic slowdown, fostered by the tight monetary policy of high interest rates. It also illustrates conflict of interests in the process of measuring and quantifying inflation expectations, as they are made under the order of the Bank of Russia. An overview of the determinants of inflation expectations is presented supplemented by the basic correlation analysis of data. Problems in methodology of implementing survey on inflation expectations and estimating their factors are discussed. It goes on to argue that rational expectations theory has a great conflict with psychology and practice. A number of empirical investigations, based among other things on rational inattention theory, provide arguments for limited rationality. The paper concludes that reducing inflation expectations in Russia must also be synchronized with other economic policy objectives, namely, economic growth, social welfare, competitiveness, investment activity, inequality.