July 23, 2021
MOSCOW (Reuters) – The Russian Central Bank Governor Elvira Nabiullina spoke at an online press conference after the central bank raised its key rate to 6.50% on Friday.
Below are the highlights of her comments:
RATE DECISION:
“The decision is based on a significant review of macroeconomic forecasts… The notable policy step we have taken is needed in order to bring inflation in line with the target.”
“Deposit and loan rates were not as quick to react to the policy rate adjustment as the OFZ bonds, today’s decision is aimed at speeding up this process.”
“The neutral (policy rate) range remains at 5-6% given inflation close to 4%… It is premature to say whether this rate hike is going to be the last one in the policy tightening cycle.”
“We considered the options of raising the rate by 50, 75, and 100 basis points.”
“We currently see the policy rate in the 6-7% range next year which will produce inflation at 4.0-4.5%.”
ECONOMIC GROWTH:
“Our policy will not harm economic growth rates.”
INFLATION:
“The first signs of inflationary pressure weakening appeared in the first half of July but this is not yet sufficient to talk about sustainable inflation slowdown.”
“We must not put up with elevated inflationary expectations so that they do not anchor on this high level.”
“We expect that in annual terms the decrease in inflationary pressure will become visible in autumn.”
“There are many reasons to analyse the inflation target, we will look at how the target is formulated, its level and whether it will be a point or a range. We will discuss this for a year with experts, academics, business representatives and the public.”
OUTLOOK REVISION:
“According to our forecasts, the OPEC+ oil output increase will add 0.1 percentage point to GDP growth in 2021 and 0.2-0.3 percentage point in 2022.”
“A good (grain) harvest may provide for more significant food price decline.”
“The state budget may be executed with some surplus.”
RISKS:
“There are signs of overheating in the unsecured loan market. Taking into account data for the last few months, we will decide on additional measures to cool down this segment.”
“Geopolitical risks are also something to which we continue to pay attention.”
BANK REGULATION:
“We are not changing our approach to bank regulation because of this (change in national wealth fund asset structure), but our banking regulation already includes measures aimed at making rouble deposits and loans more attractive and foreign currency ones less attractive.”
(Reporting by Darya Korsunskaya, Anastasia Lyrchikova and Tatiana Voronova; Writing by Olzhas Auyezov; Editing by Katya Golubkova)
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