Russian central bank chief set for new term

Russian President Vladimir Putin has proposed reappointing central bank Chief Elvira Nabiullina, again calling on the seasoned economist who has guided the country through difficult periods.

In office since 2013, 58-year-old Nabiullina helped guide Russia’s economy through a previous round of Western sanctions in 2014 over Moscow’s annexation of Crimea, as well as wild swings in the price of oil and bouts of inflation.

“The president of the Russian Federation has proposed to the Duma as candidate for the post of central bank governor Elvira Nabiullina,” the lower house of parliament said on its Telegram channel on Friday.

The Duma will vote on her reappointment on Monday.

On February 28, four days after Russian troops entered Ukraine, the central bank raised its main interest rate from 9.5 to 20 per cent after Western nations imposed sanctions that largely cut Russia’s financial sector off from the global economy.

The Russian central bank’s board held its main interest rate at 20 per cent, as expected, at a regular meeting on Friday.

Nabiullina, who delivered a speech instead of holding her customary post-meeting press conference, said that it was “extremely difficult” to provide updated economic forecasts in the current conditions, but she would do so next month.

She nevertheless sought to strike a reassuring tone about the economy, saying the measures undertaken in response to the “unprecedented” Western sanctions helped avoid a run on banks and that the liquidity situation has stabilised.

“Inflation will remain elevated for a certain amount of time, but we won’t allow an inflationary spiral develop,” said Nabiullina.

“The Bank of Russia’s monetary policy should allow the economy to gradually adapt to the new conditions and return to a four-per cent inflation level in 2024,” she added.

The central banker said the spike in inflation was driven by consumers snapping up things like electronics

and household goods they fear will disappear from shelves due to sanctions.

While the central bank had also noted a rise in consumption of grains, flour, pasta and sugar, Nabiullina said Russia has sufficient stocks and production capacity of these foodstuffs.

She said bond trading will resume on the Moscow stock exchange, which has been closed since the day following the start of Russia’s military operation in Ukraine.

Nabiullina said the central bank would buy Russian government bonds to reduce volatility in that market.

William Jackson, chief emerging markets economist at Capital Economics, said that Nabiullina’s speech indicated that Russian policymakers believe that sanctions and restrictions are likely to remain for some time.

However, he said her comments also indicated that Russian policymakers aim “to roll back capital controls, revert to a floating ruble and make the inflation-targeting regime

the focus of monetary policy as soon as possible.”