We are studying how to adjust foreign exchange controls so that importers can buy (foreign exchange) on the exchange, for those who are interested in foreign exchange.
Elvira Nabiullina Governor of the Central Bank of the Russian Federation.
The Central Bank of the Russian Federation is considering further cutting its key interest rate at upcoming board meetings, Governor Elvira Nabiullina said, pointing to the economic challenges the country faces as it tries to cushion the impact of Western sanctions.
Nabiullina also said that they are studying adjustments to their currency controls to avoid situations where the ruble’s exchange rate drifts to a shadow market from official levels.
“We are studying how to adjust foreign exchange controls so that importers can buy (foreign exchange) on the exchange, for those who are interested in foreign exchange,” Nabiullina said.
The central bank’s emergency interest rate hike to 20% in late February helped stabilize the ruble and overcome a spike in inflation, Nabiullina said. The bank then lowered the interest rate to 17% on April 8. His next Board of Directors meeting is on April 29.
“We will consider the possibility of a further reduction in the next meetings,” he said in the lower house of Parliament, although he did not confirm whether the cut would be made at next week’s meeting.
Andrei Kostin, head of Russia’s second largest lender VTB (VTBR.MM), forecasts that the central bank will cut the key interest rate to 15% this month and 12-13% by the end of the year, according to the news agency. TASS.
Inflation in Russia stands at 17.6% and is on track to accelerate to 22% this year, with the economy expected to contract 9.2% in 2022, according to a central bank survey of economists.
Nabiullina warned that Russia, which in 2021 registered its highest economic growth in 13 years with 4.7%, will now undergo structural changes, since its access to the world financial system and trade is limited by sanctions.
“Problems can arise when there is a highly localized production and when there has been fairly high import substitution,” Nabiullina said.
For example, he said that Russia produces its own paper but uses foreign bleaching agents, or urgently needs foreign-made packaging materials for domestically produced food.
He also explained that he intends to expand the number of countries that accept Russian Mir bank cards, an alternative to VISA and MasterCard who suspended their operations in the country.
China’s Mir and UnionPay serve as options for the Russian population to make payments abroad since Russian banks were cut off from the global financial system due to sanctions.
Widely recognized as one of the best central bankers in the world for her efforts to curb inflation, Nabiullina has also been the target of sanctions.