Interest rates

Russian central bank governor speaks after interest rate cut

The national flag flies over the headquarters of the Russian Central Bank in Moscow, Russia, May 27, 2022. REUTERS/Maxim Shemetov

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July 22 (Reuters) – Russian Central Bank Governor Elvira Nabiullina gave a press conference after the central bank cut its benchmark rate by 1.5 percentage points to 8% on Friday.

Nabiullina spoke in Russian. The quotes below have been translated by Reuters.


“Our position here is unchanged. We believe the exchange rate should be floating and we should not move to an exchange rate targeting regime.”

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“At the same time, we do not reject the possibility of monetary interventions. They are possible for a floating exchange rate, but within the framework of the fiscal rule. [Deciding] which instruments – “friendly” currencies or other instruments – are the prerogative of the government.”

“If the fiscal rule is introduced this year, we are of course ready to conduct foreign exchange operations. We will only announce the parameters of these operations after the decision on the fiscal rule itself has been taken.”


“As for a drop in food prices in the fall, it is possible. A good harvest is a disinflationary factor… But, within the framework of standard seasonality, it is not a factor that affects policy because monetary policy responds to persistent factors and price fluctuations are usually temporary factors.”


“We are comparing (this) situation to a pandemic in many ways, but in essence they are two different crises. Because the pandemic crisis could be called a cyclical crisis, whereas at the beginning there was a shock due to lockdown, because people wouldn’t be able to consume like they had – and we lowered the rate precisely to drive up that demand. Demand picked up very quickly, but then supply issues started to appear and they have proven to be more durable. This has led to higher inflation in the second half of 2021 and the unwinding of inflation expectations.”

“Now the crisis is structural and has been largely catalyzed by supply shocks. At the same time, the economy’s potential is diminishing. And even a very large rate cut could not offset the effects on the same measure as in 2020…

“For us, there are no ‘red lines’ for a rate decision, either down or up. The rate will be chosen based on a trajectory that should guarantee the return of the inflation on target in 2024.”


“We had substantive discussions on three options – 8%, 8.5% and 9%”.

“The potential for further rate cuts over the medium term remains and we have shown that in our average policy rate forecast, if you look at the trajectory, it is gradually declining. But it will all depend on incoming data, the situation is uncertain, there is many multidirectional alternating factors.

“So we will adjust monetary policy so that by 2024 we are back to 4% – but of course we will react to all incoming information, emerging trends.”


“We don’t see any deflationary trends. Deflation is a steady decline in prices… Annual inflation is still in double digits.”

“A drop in prices in certain weeks and months is a common situation in our country. We usually know that we have lower prices when fruit and vegetable prices go down, but this time we had a drop in the general price. the price index in June, and we remain on this view: a significant correction in prices after a very sharp rise in prices in February and March. But we don’t see an emerging trend of sustained deflation.


“As for the operation of Russian branches of foreign banks, permissions to sell them, decisions are made by a government commission, we participate in it, and these decisions will be made individually each time. But, of course, the attitude towards our Russian companies ‘ subsidiaries abroad are taken into account here.”


“With regard to the risk of a global recession, of stagnation – indeed, there is such a risk, we take into account that there is such a risk.”


“We are currently discussing with the government, the Ministry of Finance, a possible mechanism for the fiscal rule. We support the renewal of the fiscal rule – of course it will be modified.”

“In our opinion, this is an important mechanism that guarantees the sustainability of economic parameters, budgetary parameters, budgetary expenditures, regardless of what happens with the oil and gas situation. But I would not like to comment on any specific parameters before they are officially announced by the Ministry of Finance and the government.


“In recent weeks, the slowdown in inflation has become widespread.”

“The main reason for lower inflation is a correction in prices after the jump in March. We still think that is the case.”


“The significant strengthening of the ruble has had an impact on people’s attitude towards shopping; people think that current prices are unreasonably high and expect them to fall.”


“The dynamics of imports are in line with our expectations: after a significant decline, they are starting to recover.”

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Reuters reporting; Editing by Kevin Liffey

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