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The rate of inflation has become a priority for the Central Bank of Russia: to combat it the Central Bank of Russia has reduced the volume of its foreign currency interventions and, actually, switched over to a floating exchange rate of the ruble.

Heavy inflationary pressure and adverse developments in the Russian economy have become the key factors for the adjustment of the monetary policy objectives, as evidenced by a new version of The Guidelines for the Single Monetary Policy in 2015 and for 2016 and 2017.

The fact that bank depositors in Russia are fearing of actual devaluation of their capital may provoke banking panics, in which case it is small and medium-sized banks that are very likely to be principal victims. The panics would be followed by economic contraction, decline in output and unemployment growth.

The Federal State Statistics Service (Rosstat) has published the preliminary Q3 2014 results, showing that Russia's GDP growth rates stood at 0.7% relative to the same period last year, less than in Q1 (0.9%) and Q2 (0.8%).

The federal budget has recently been playing an essential role in total balance of regional budgets.

A few days ago the Central Bank of Russia submitted to the State Duma a draft guidelines for the single monetary policy, also including Central Bank's updated version of the macroeconomic development projection for 2015-2017.

On November 10, the Central Bank of Russia announced the abandonment of the existing mechanisms of the exchange rate policy by giving up both the use of the interval of admissible values of the ruble cost of the bi-currency basket and regular interventions not only at the limits of the interval, but also beyond them.

From November 5, 2014, with the ruble value of the bi-currency basket amounting to the limits of the operating interval the volume of interventions by the Central Bank of Russia will not exceed $350m a day. In addition to the above, an intervention by the regulator will be possible only in case of the bi-currency basket's value being at the limits of the interval or beyond it during the entire trading session. So, fr om now on the Central Bank of Russia will not react to short-term swings of the exchange rate.

In October, the rate of revocations of bank licenses remained rather high. A total of 9 credit institutions were deprived of the right to pursue their banking activities.

The norms of the agreement on association of Ukraine with the European Union started to be formally applied on Saturday, November 1. However, due to a tough position of Russia which protects its market the economic part of the association will be effective only fr om January 1, 2016.

On October 31, 2014, at the regular meeting of the Board of Directors of the Central Bank of Russia a decision was taken on substantial raising of the key interest rate to 9.5% annually (growth of 1.5 p.p.).

On the other day, Alexei Kudrin, Former Finance Minister of Russia recommended the Central Bank of Russia to switch-over to the floating exchange rate of the ruble this November, rather than in 2015. Such a proposal appears quite justified.

In September 2014, the level of unemployment (the ratio of the number of the unemployed to the number of the gainfully employed population) amounted to 4.9%. As compared to August 2014, in September 2014 the number of the gainfully employed population decreased by 425,000 persons or 0.6%, while the number of the unemployed rose by 57,000 persons or 1.6%. As compared to September 2013, the number of the gainfully employed population increased by 179,000 or 0.2%, while the number of the unemployed fell by 270,000 persons or 6.8%.

According to the data as of October 28, banks' debt to the Central Bank of Russia on REPO deals increased to Rb 2.9 trillion, while the debt on other loans amounted to Rb 2.9 trillion, too. It is to be noted that in a situation of the ruble depreciation the liquidity provided by the Central Bank of Russia immediately gets into the foreign exchange market and exerts further pressure on the ruble.

In 2014, the macroeconomic situation is characterized by gradual slowdown of development. In September 2014, under the effect of growth in credit resources, limitation of companies' access to borrowing of funds on global financial markets and prevalence of high geopolitical risks a year-on-year drop of 2.8% in investments was observed.

The draft federal budget for 2015 and the 2016-2017 planned period submitted by the Government provides for utilization of funds received from privatization of federal property as an individual source of financing of the deficit of the federal budget.