Presidential adviser Sergei Glazyev criticized the monetary policy of the Central Bank, speaking Thursday at a business meeting “Russian business and the problem of monetary policy”. “The Central Bank mindlessly follows the recommendations of the international monetary Fund to reduce the money supply and raise rates”, — he said.
The regulator has announced a policy of inflation targeting, however, the price level began to rise, said Glazyev. “It’s as if the captain ordered full speed ahead, and the ship sailed back,” said the economist. He thinks it happened because the Central Bank “let go” tools to affect monetary policy, and put all control to the regulation of interest rates. As a result, the speaker said that the ruble was “abandoned”.
“80% of inflation due to the devaluation of the ruble over the last two years,” he estimated. According to Sergey Glazyev, it is not enough to control only the interest rate: “if you don’t control the ruble exchange rate in an open economy there will always be the hedge Fund, which may affect the financial system of the country.”
In addition, as noted by Advisor to the President, when the Central Bank raised interest rates, then the majority of Russian companies were cut off from the source of refinancing. “Half of working capital of enterprises is loans… This is the second factor influencing inflation, as the contraction in output always leads to higher prices,” he said.
According to Glazyev, the support that the Bank of Russia provides to the financial sector, leads to the formation of a financial bubble. According to economist, a sharp increase in turnover on the Moscow exchange, which is observed in recent years, is associated with the growth of speculative operations on the currency market. “The ruble has become a tool for speculative profit. Moscow exchange is now a plaything in the hands of speculators,” he said.
Glazyev called a sharp increase in turnover on the Moscow exchange, “the largest economic miracle of the last 20 years.” “For some three years the volume of transactions on the Moscow exchange increased fivefold. 90% is the foreign exchange segment. That is, the volume of speculative transactions has now reached 100 trillion rubles in the same quarter. The Central Bank’s policy has not led to the reduction of inflation — it resulted in inflating the speculative bubble,” said Glazyev. The amount of profits received by the speculators on the exchange, is estimated in $50 billion over the past two years, he said. “That is why nowhere in the world national currency is not so much fell, as we have,” — said Glazyev. Thus, according to him, three-quarters of speculative operations on the stock exchange is committed for the benefit of non-residents.
According to Glazyev, to stimulate economic growth, the Bank of Russia should issue. It estimates the required amount of 3 to 7 trillion rubles This amount, in his opinion, should reach the real economy through banks at minimal or zero interest rate.
“In Russia expensive money. Without changing this situation out of the crisis there”, — says Glaziev.