Russia’s central bank governor speaks after cutting key interest rate to 7.5%

Russia’s central bank governor speaks after cutting key interest rate to 7.5%

(Reuters) – Russian Central Bank Governor Elvira Nabiullina and Deputy Bank Governor Alexei Zabotkin held a press conference after the central bank cut its key interest rate by half a point to 7.5 percent on Friday.

Central Bank officials spoke Russian. The quotes below have been translated into English by Reuters.

NABIULLINA ON SALE OTKRITIE BANK TO VTB

“We are in the process now, the evaluation process is supposed to be completed by mid-October, so it is now impossible to provide an initial estimate… at the moment we expect that by the end of the year… we will complete this deal.”

Nabilina on Russia’s frozen foreign reserves

“As for gold and foreign exchange reserves, legal prospects – well, it’s a very long process. We are preparing, looking at this issue, the best way forward.”

NABIULLINA about the use of foreign currencies and cryptocurrencies

“The currencies we are used to, the reserve currencies – the dollar and the euro – are toxic to many holders, because there is a risk of (assets) being frozen.”

“We see, of course, that the banks are trying to reduce these risks … but it will always be possible to change the foreign currency into rubles.”

“Our position is that we are ready to discuss ways to use digital financial assets (DFA), including cryptocurrencies, for international settlements, but we continue to oppose the use of cryptocurrencies as a means of payment and oppose their free circulation within the country.”

“As for the digital ruble, we are very actively working on this project, and we consider it very important for the development of the financial system. We are now testing the digital ruble with 15 banks, but this is a rigorous test.”

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NABIULLINA for future price changes

“As we are nearing the end of the easing cycle, we accept that the next step, in addition to holding the rate, could be a hike. However, we also do not rule out a rate cut.”

“We really think the scope for further rate cuts is narrowing.”

“Of course, we’ll look at the data, we can’t rule out some other moves, but the probability of a rate cut has diminished.”

NABIULLINA on the piece price

“We estimate that we are in a neutral monetary policy area.”

“We considered three options – a 25 basis point cut, a 50 basis point cut, and the price to remain unchanged.”

Nabilina on blowing

We do not exclude that annual inflation in the first half of 2023 will be less than 4%.

“We are seeing that the one-time inflation-reducing factors are gradually losing their potency, while the risks of inflation are increasing.”

“People now tend to save more than they spend.”

“We are concerned that inflation expectations will remain elevated.”

Zapotkin on budget and price path

“Now the base forecast… is based on the budget policy criteria that the Ministry of Finance presented in June… if the budget is in the end… (different) significantly from those criteria, that will be an important factor to be taken into account, along with factors other, when determining the rate path for next year.”

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