* OECD says policy tightening may be needed in 2013 to boost
* Sees GDP growth at 3.8 pct in 2013, up from 3.4 pct in
* Election spending promises to cost 6 pct of GDP, risk
PARIS, Nov 27 Russia may have to raise interest
rates and tighten rules on lending next year to crack down on
inflation, the OECD said on Tuesday.
"More tightening will probably be required in 2013 to gain
credibility in the run-up to a more formal inflation targeting
regime," the Organisation for Economic Co-operation and
Development said in its annual economic outlook.
Russia is gradually moving from a policy regime that targets
the rouble's exchange rate towards that of inflation targeting,
which involves tighter control of interest rates and a greater
role for official inflation targets.
A rise in inflation above the central bank's formal 5-6
percent target range for 2012 led the bank to raise policy rates
by 25 basis points in September, although a recent moderation in
inflation has eased pressure for further imminent hikes.
While higher inflation mostly resulted from a poor harvest
and a delayed increase in regulated prices, core inflation had
also risen, suggesting that price pressures were feeding through
into other sectors, the OECD said.
It forecast that the average monthly rate of consumer price
inflation would rise to 6.4 percent in 2013 from 5 percent in
2012. But it expected that inflation would fall gradually
towards the central bank's policy target of 4-5 percent in 2014.
While some economists are concerned that tighter monetary
policy would exacerbate a deepening economic slowdown, the OECD
was relatively optimistic about Russia's growth prospects.
It forecast that growth in gross domestic product would
rebound to 3.8 percent in 2013 and 4.1 percent in 2014, from 3.4
percent this year. It anticipated higher oil prices, an easing
of headwinds from the euro zone crisis and domestic consumption
growth driven by low unemployment and rising real wages.
However, the OECD was concerned over the long-term impact of
additional government spending promised by President Vladmir
Putin, who won election for a third Kremlin term earlier this
"It is uncertain how electoral spending promises that
amounted to a cumulative 6 percent of GDP by 2018 will be
actually implemented, but they might contribute to overheating,"
the report warned.