The governor of the Russian central bank speaks after the interest rate cut

Nabiullina spoke in Russian. The quotes below are translated by Reuters.


“Our position on this is unchanged. We believe that the exchange rate should float and that we should not switch to an exchange rate-oriented regime.”

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

“If the budget rule is introduced this year, we are of course prepared to carry out currency transactions. We will only disclose the parameters of these operations after the decision on the budget rule itself has been made.”


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


“We compare (this) situation to a pandemic in many ways, but fundamentally they are two different crises. Because the pandemic crisis could be called a cyclical crisis, as there was a shock at the beginning because of the shutdown, because people were not in able to consume as they had – and we lowered the exchange rate precisely to drive that demand up. Demand recovered very quickly, but then supply problems began to arise and proved to be of longer duration, leading to an increase in inflation in the second half of 2021 and the expiration of inflation expectations.”

“Now the crisis is structural and has been largely catalyzed by supply shocks. At the same time, the potential of the economy is diminishing. And an interest rate cut, even a very large one, could not offset the effects to the same extent as in 2020…

“For us, there are no ‘red lines’ for an interest rate decision, neither from the bottom up nor from the top. The rate will be chosen based on a trajectory to ensure that inflation returns to the target in 2024.”


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

“The potential for further rate cuts in the medium term remains and we have shown that in our average policy rate forecast, if you look at the rate, it is gradually coming down. But everything will depend on the incoming data, the situation is uncertain. , there is many multiway fluctuating factors.

“Therefore, we will adjust monetary policy so that we come back to 4% in 2024 – but of course we will react to all the information that comes in, to the new trends.”


“We don’t see a deflationary trend. Deflation is a constant fall 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 are usually aware that we have lower prices when the prices of fruit and vegetables fall, but this time we had a fall in the general index. in June , and we maintain this view: a significant price correction after a very significant sharp increase in prices in February and March, but we do not see a budding trend towards continued deflation.”


“Regarding the operation of Russian subsidiaries of foreign banks, permits to sell them, the decisions are made by a government commission, we participate in them, and these decisions will be made individually each time. But of course here the attitude to the subsidiaries of our Russian companies abroad.”


“In terms of the risk of a global recession, stagnation – yes, there is that risk, we take into account that there is that risk.”


“We are now in negotiations with the government, the Ministry of Finance, about a possible mechanism for the budget rule. We support the expansion of the budget rule – it will of course be adjusted.”

“In our view, this is an important mechanism that ensures the sustainability of the economic parameters, the budget parameters, the budget expenditures, regardless of what happens with the oil and gas situation. But I will not comment on specific parameters until they are officially the Ministry of Finance and the government is been announced.”


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

“The main reason for the fall in inflation is a price correction 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 to shopping; people find the current prices unreasonably high and are waiting for them to come down.”


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

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