By the Bank of Russia monetary policy is “economic suicide” and the damage from it exceeds 10 trillion rubles, writes presidential adviser Sergei Glazyev in an article published November 29 on the website of “Kommersant”. Glazyev wrote that in recent years, the Russian economy is artificially driven into the trap of stagflation and doomed to increasing technological backwardness and degradation. “The damage from the policy of the Bank of Russia since the transition to inflation targeting has exceeded 10 trillion rubles in terms of unreleased products and 3 trillion rubles of investments to be done, not to mention the lost jobs and declining all this time, incomes of the population”, — he said.
One of the most serious mistakes of the leadership of the Central Bank President’s Advisor calls the decision to abandon the maintenance of a stable exchange rate and to focus on reducing inflation.
“The current policy of the Bank of Russia is unprecedented recklessness. When the head of this Department says that the free floating exchange rate is meant to demirovici external shocks to the economy, the fading sense of reality. It’s still something to offer during a storm to raise all the sails and disconnect the steering gear to “tempfilepath” the impact of wind gusts on a sinking ship,” writes Glazyev.
In his opinion, for “damping of external shocks” requires a stable exchange rate of the national currency, and the attempts of the Central Bank to reduce inflation by tightening monetary policy will lead to the technological degradation of the economy and a fall in its competitiveness. In the future this may lead to the devaluation of the ruble and the next wave of inflation, the speaker said.
“You should immediately go to a prudent monetary policy in accordance with scientific recommendations and practical experience of successfully developing and developed countries. Further delays in their implementation can lead to irreversible catastrophic for Russia the consequences,” warned adviser to the President.
Earlier Glazyev said that Russia’s economy is “off the growth trajectory and fell into a crisis” due to “gross errors” of the Central Bank, and to launch the “economic miracle” would be sufficient to carry out the issue, ensuring the inflow of funds into the real sector of the economy. According to Glazyev, in this approach, the GDP of Russia “objectively need” to grow by more than 7% per year, and the level of industrial production is not less than 10%. November 22, at the financial forum in Moscow, Glazyev said that the Russian economy is like a patient with myocardial infarction.
The monetary policy of the Central Bank envisages the inflation to 4% in 2017 and to retain its close to this level in the medium term. In an interview with Forbes, the head of the Central Bank Elvira Nabiullina said the main task of the regulator, ensuring stable and low inflation and consistently low interest rates. Both of these factors, according to Nabiullina, is more important than stable exchange rate, the fixation of which to the high volatility of the external environment can be devastating.
In early August, 2015 Russian President Vladimir Putin praised the efforts of the Central Bank to maintain the stability of the financial system. “The Central Bank is doing a lot to strengthen the national currency, at least in order to feel stable, to just consistently feel our financial system as a whole. See, how hard you go on this way”, — said the head of state at a meeting with Chairman of the Central Bank Elvira Nabiullina.