Nabiullina has linked further rate cuts with high oil prices


About the possibility of monetary easing in high oil prices Elvira Nabiullina said in an interview with Bloomberg.

“Higher oil prices may lead to strengthening of the ruble and — through the channels of foreign exchange — to a more rapid reduction of inflation expectations to the inflation slowdown. Then we can ease monetary policy faster,” — said the head of the Central Bank.

Recent reduction of the key rate of the Central Bank occurred on 15 September. Then the Bank of Russia has set it at 10% per annum and promised not to change its level at least until early next year. His decision regulator explained by the slowdown in inflation and “inflation expectations while preserving the fragile economic activity.” “The reduction of inflation, in particular, was due to the dynamics of the ruble in conditions more favorable than previously expected, the foreign economic situation”, — said the Central Bank reasons for the decline in prices.

On September 28 the first Chairman of the Central Bank Dmitry Tulin, introducing the draft report “guidelines for the single monetary policy for the 2017-2019 years,” said the Bank of Russia seeks to avoid unnecessarily frequent changes in the key rate. “Our goal is inertia in the dynamics stakes. That is not to hurry with its decline as good news and not to rush to her advancement when you receive bad news,” said Tulin.

According to him, the management of the Bank believes that it is important for the stabilization of inflationary expectations and overall economic stabilization. “We maybe don’t fully give our business community,” acknowledged Tulin. At the same time, he noted that the Central Bank can’t cut rates faster. “But we do so that they did not increase”, — said the first Deputy Chairman of the regulator. “If we, say, gave in to some panic and in the winter—spring of last year, would increase rates, it would be a serious shock to the financial sector and the real sector”, — he said.

Up to 17%, the Central Bank raised its key rate 16 Dec 2014 at a special meeting of the Board of Directors, guided by the “need to limit significantly increased devaluation and inflation risks”.

The price of Brent crude has established a local minimum in January 2016, dropping to $27.1 per barrel. At the time of writing, a barrel of Brent oil at the stock exchange gave $52,52 per barrel.

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