Russia's Nabiullina on rates, inflation, the rouble and tariffs
MOSCOW, April 25 (Reuters) - Russian Central Bank Governor Elvira Nabiullina and her deputy Alexei Zabotkin addressed a news conference on Friday after the central bank held its key rate at 21%, as expected.
Nabiullina and Zabotkin spoke in Russian. The quotes below were translated into English by Reuters.
NABIULLINA ON RATE DECISION
"We had a broad consensus to keep the rate on hold. We discussed, rather, the nuances of the signal."
"Some time ago we identified some triggers that would allow us to raise the issue of lowering the key rate...We analyse a wide range of factors and trends, but first of all we pay attention to a truly steady decline in current inflation, a steady decline in inflation expectations."
"We have also noted the slowdown in consumer activity, consumer lending, reduced tension in the labour market and the absence of pro-inflationary shocks from the budget or external conditions. In terms of these factors, we already see some evidence of momentum, but we need more confidence that all of this is sufficiently sustainable. Although, compared to the last (rate-setting) meeting, many processes probably look more steady now."
NABIULLINA ON INFLATION
"...We passed the peak (of inflation) in the fourth quarter...But the turning point and the transition to a decline in annual inflation, in our opinion, will occur in May...Some increase in inflation is possible in July".
NABIULLINA ON THE ROUBLE EXCHANGE RATE
"We tend to attribute a larger part of the strengthening that has occurred since the beginning of the year to more stable factors, primarily related to the action of tight monetary policy...this part of the rouble strengthening is part of the process of disinflation, more restrained dynamics of demand, greater attractiveness of the rouble as a means of saving."
"But we are still not ready to attribute all the strengthening of the rouble to the monetary policy action...The news background related to geopolitics makes its own contribution. And in this regard it is probably premature to talk about the sustainability of the strengthening of the exchange rate. Here we need not only market expectations, but also actual shifts."
*NABIULLINA ON TARIFFS
"The situation is developing dynamically, and we will have to keep track of what level of import tariffs will eventually emerge. We have taken into account the factor of trade wars in our forecast - we have lowered the growth rate of the world economy, we have slightly reduced the estimate of oil prices. Because the main channel of influence of these tariff wars on the Russian economy is a decrease in prices for the main goods of our exports. The other effects, in our opinion, are more limited, given the structure of foreign trade and the fact that there are restrictions on financial flows."
"The volume of Russian exports to the U.S. is insignificant and there is no need to stimulate domestic demand to replace the falling external demand in these conditions. So for us the direct impact is minimal. For us, the impact of tariffs is more indirect, primarily through weaker global demand, lower global commodity prices - and this is a pro-inflationary risk."
*ZABOTKIN ON TARIFFS
"Obviously, the impact of trade wars will strongly depend on the scale of protectionist measures and the fragmentation of world trade that will eventually emerge. This is a factor of considerable uncertainty relative to our baseline forecast. The current picture has not led to a significant change in the baseline forecast to date."
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