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Russian regulator to continue tight monetary policy amid unfavorable factors — official

November 10, 2014, 12:03 UTC+3 MOSCOW
The tight monetary policy will help keep inflation within reasonable boundaries and protect the population from external shocks, Central Bank First Deputy Chairwoman Ksenia Yudaeva said
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© TASS/Artiom Korotaev

MOSCOW, November 10. /TASS/. The Central Bank of Russia will continue to pursue its tight monetary policy if unfavorable factors persist, Central Bank First Deputy Chairwoman Ksenia Yudaeva said on Monday.

“The Bank of Russia will apply its tight monetary policy as long as material risks exist for higher inflation expectations amid unfavorable external political and external economic conditions,” the Central Bank press office quoted Yudaeva as saying in comments on the regulator’s specified monetary policy guidelines for the next three years released on Monday.

“This (tight monetary policy) will help keep inflation within reasonable boundaries and protect the population and Russian producers from external shocks. The current situation is conducive to import substitution and the development of domestic production,” she said.

Given a favorable scenario, Russia’s economic growth may reach over 3% in 2017 but the growth rate will be positive even in a negative scenario, the Central Bank first deputy head said. “As soon as a steady trend emerges towards lower inflation and inflationary expectations, the Bank of Russia will be ready to ease its monetary policy,” Yudaeva said.

The Russian Central Bank will temporarily curb ruble liquidity to end panic demand for foreign currency, Chairwoman Elvira Nabiullina told Rossiya 24 channel in an interview Monday.

“And thirdly (in addition to intraday interventions limit and the possibility to enter the market with unscheduled high-scale interventions), we will temporarily limit the ruble liquidity supply because it is used not only to finance the economy but also to play on the foreign exchange market,” Nabiullina said.

First Deputy Chairwoman Ksenia Yudayeva said that on Friday the ruble set record lows against the dollar and the euro due to speculations. President Vladimir Putin said that the reason behind the weakening of the ruble are speculative rather than fundamental.

The Central Bank will continue interventions on the domestic currency market to add money to funds of the Finance Ministry and the Federal Treasury and in connection with their spendings. Such operations of the bank will allow transmit foreign currency demand or offers from the ministry and the treasury to the domestic currency market. Equal distribution of the volumes will allow limit the influence of such operations on the rouble rate, the bank said in the report.

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