The 21st of July | Reuters The governor of the Russian Central Financial institution, Elvira Nabiullina, and her deputy, Alexei Zabotkin, held a press conference on Friday, after the announcement that the financial institution had increased its main interest rate to 8.5%, which was more than what was anticipated.
The Russian language was used by the officials of the Financial Institution of Russia. These quotations had been translated into English by Reuters, which may be found below.
NABIULLINA REGARDING THE IMPACT OF ROUBLE WEAKENING ON THE MOTION TO SET THE RATE
There is no doubt that the decline in the value of the rouble is a significant problem; nevertheless, it is not the most essential problem.
According to our point of view, the most critical problem for us right now is the excess of demand in comparison to the potential to grow supply, and this is connected to limits, including the lack of available labor.
CONCERNING THE RESTRICTIONS ON FOREX WITHDRAWALS NABIULLINA
At this time, the limits will remain in effect until September 9th. In the meanwhile, we are able to declare that there are no reasons for the removal of such limitations, notwithstanding the fact that we have not yet made a decision on the matter.
I would like to bring to your attention the fact that these limits were linked to the fact that there are restrictions on the importation of foreign currency from other countries by Russian banks anywhere inside the territory of the Russian Federation.
NABIULLINA REGARDING THE CONTROL OF FOREX CURRENCY
It is naturally rather difficult for businesses to navigate through the various limitations that are now in place, despite the fact that there are exceptions to these limits. At this very time, we are in the process of compiling a list of the actions that have been done, and our position is that we must always maintain primarily these limits on foreign exchange, which may be significant when it comes to retaliatory actions.
According to our point of view, the remains should be abolished, and businesses should be provided with more options and flexibility to develop new logistical routes and partnerships with new counterparties.
NABIULLINA REGARDING EXPORTERS WHO WANT TO SELL FOREX
As a result of the foreign currency that is a portion of the earnings from exports that are brought into our country, in spite of the fact that the proportion has not dropped in any way, our export volumes have declined.
With regard to Russian exports, NABIULLINA
As a result of the slowdown in the rate of global economic growth, the prices of Russian export goods are beginning to reflect this trend. On the global market, the prices of resources such as fuel, coal, and fertilizers have decreased. As a result, Russian exports are experiencing twice the amount of pressure, which comes from sanctions as well as the financial cycle.
In the case of inflation risks, NABIULLINA
During the time period covered by the prediction, the risks associated with professional inflation have significantly increased. These include a potential improvement in the gap between the growth in demand and the improvement in supply capacity, the ongoing increase in the growth rates of consumer credit, and a further escalation of the scarcity of labor.
There are a number of different risks that contribute to inflation, including a more rapid conversion of the devaluation of the rouble into prices and chronically high expectations of inflation. There is still a significant risk that the external environment may deteriorate, and there is also the possibility that sanctions will be tightened at some point.
IN REGARD TO THE FUTURE RATE DECISION, NABIULLINA
In light of the modifications that have been made to our analysis of the financial picture, it is possible that a more favorable key charge trajectory will be necessary if we are to conclude the next year with inflation on the proper track very close to 4%. During the succeeding conferences, we make it possible for there to be an additional improvement in the vital thing charge. Editing was done by Kevin Liffey, while reporting was done by Reuters. We require that you adhere to the Thomson Reuters Belief Ideas set.