The Bank of Russia sees no possibility for further rate cuts
The Bank of Russia sees opportunities to further reduce interest rates, but the rate of decline will depend on a number of factors, said the head of the Bank of Russia Elvira Nabiullina.
“We have reduced our interest rates, but I think we have the opportunity for even larger exemptions, but the pace of easing will depend on economic situation, actual inflation, inflation expectations, the dynamics of oil prices. We depend on statistical data and on each meeting on our policy, analyze all these factors and determine the next step”, – said Nabiullina in an interview with CNBC on the first day of SPIEF.Nabiullina: the Central Bank may in June to improve the Outlook for oil prices in 2017
Now the key rate of the Central Bank is 9.25% per annum. Of the Central Bank in late April reduced it by 0.5 percentage points. This is the second rate reduction this year. As stated earlier Nabiullina, by 2020, the key rate may fall to 6.5-7% with an inflation rate of 4%.
Speaking about the foreign exchange market, Nabiullina said that the Bank of Russia does not want to intervene in the foreign exchange market and will adhere to the principle of free navigation of the ruble, although it exerts some negative impact on the economy.
“We have a policy of free floating, I think that the free floating regime has a negative impact on the economy,” said Nabiullina in an interview with CNBC on the first day of SPIEF.
“But I’m absolutely sure that this mode has more positive things and more benefits for our economy, and we do not want to intervene in the foreign exchange market, and we do not use our exchange rate policy to influence the currency, because I believe that currency should be established on a market basis,” – said the head of the regulator. Thus, the exchange rate will play the role of absorber of external shocks, said Nabiullina.