Russia’s central bank will abstain from a program of quantitative easing and instead rely on interest rates to boost the recession-bound economy if inflation risks continue to abate, Governor Elvira Nabiullina said.
“There’s no reason to expect QE from us — our main instrument is the key rate,” Nabiullina said Tuesday in Moscow at a meeting of the Association of Russian Banks. “I understand the sincere wish both to make loans more accessible and to spur economic growth. I understand these goals but believe that the recipes used by many countries won’t work and will have the opposite effect in the conditions of our Russian economy.”
The Bank of Russia is forging ahead with monetary easing after two rate cuts this year followed six increases in 2014, including an emergency move to 17 percent in December. Tighter policy had a stabilizing effect, countering inflation and devaluation expectations and helping ward off the “scenario of stagflation,” according to Nabiullina.
“With the easing of inflationary risks, the Bank of Russia will continue to decrease the key rate,” she said. “We don’t intend to reduce inflation at any cost, but will do it considering the capabilities of the Russian economy.”
Consumer-price growth accelerated to 16.9 percent from a year earlier in March, compared with 16.7 percent in February, the Federal Statistics Service said Monday. The economy has eclipsed inflation as the nation’s top concern, according to a survey published by state-run pollster VTsIOM on March 31.
“We expect a fairly rapid decline in inflation, if there are no new unforeseen circumstances,” Nabiullina said. Price growth is set to slow to about 9 percent next March, she said, saying it’s “realistic” to reach the central bank’s medium-term inflation target of 4 percent in 2017.