Latest news with #Nabiullina
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First Post
4 days ago
- Business
- First Post
Russia's Central Bank chief under pressure to cut interest rates amid economic strain of war, sanctions
The Russian central bank's key interest rate has stood at 21% since October, aimed at taming inflation that peaked above 10 per cent late last year, well above the 4% target read more Russia's President Vladimir Putin meets with representatives of the Russian business circles in Moscow on May 26, 2025. (Photo: AFP) Russia's central bank governor, Elvira Nabiullina, is under growing pressure from the Kremlin to cut interest rates as businesses struggle with record-high borrowing costs and signs of economic strain outside the military sector mount. Government officials expect Nabiullina to lower the benchmark rate soon, possibly as early as Friday's central bank meeting, Bloomberg reported, citing three people familiar with internal discussions. The shift in tone marks a reversal from last November, when Finance Minister Anton Siluanov supported rate hikes to combat soaring inflation. Nabiullina, 61, was credited with stabilising the economy in the wake of Russia's 2022 invasion of Ukraine, deploying capital controls and other measures to stave off collapse. She continues to enjoy the support of President Vladimir Putin. STORY CONTINUES BELOW THIS AD But the central bank's key interest rate has stood at 21 per cent since October, aimed at taming inflation that peaked above 10 per cent late last year, well above the 4 per cent target. That policy has helped cool inflation, with the seasonally adjusted annualized rate falling to 6.2 per cent in April, down from 10.7 per cent in January, according to a central bank report published May 27. Still, economists warn the drop in inflation may not be stable, as it has largely been driven by a stronger ruble. 'The challenge for the central bank now lies in choosing between two risks,' said Olga Belenkaya, head of macroeconomic analysis at Finam in Moscow. 'Keeping the rate unchanged risks a recession, while a cut could reignite inflation.' High interest rates are already squeezing large parts of the economy. Industrial firms, especially those not tied to military production, are scaling back investment. Severstal PJSC, one of Russia's largest steelmakers, posted a negative cash flow of 33 billion rubles ($421 million) in the first quarter, compared to a positive figure of the same amount a year earlier. The company said the high cost of borrowing has delayed customer projects and forced it to rely on cash reserves to fund operations. Severstal said a rate cut to at least 15 per cent would be necessary to normalise conditions. Dozens of major firms have cancelled dividend payments for 2024, and broader signs of a slowdown are emerging. Civilian goods production fell 0.8 per cent monthly during the first quarter, hitting its lowest level since April 2023, according to an April report by the Center for Macroeconomic Analysis and Short-term Forecasting in Moscow. STORY CONTINUES BELOW THIS AD Adding to economic pressure, revenues from oil and gas exports are slipping amid lower global crude prices and a stronger ruble. Authorities have already revised budget forecasts and more than tripled the fiscal deficit target. To ease the burden on struggling businesses, the central bank last month recommended that lenders restructure loans and temporarily lowered reserve requirements on restructured credit. As officials push for rate relief, the central bank faces a delicate balancing act between supporting growth and keeping inflation in check. All eyes are now on Friday's decision.
Yahoo
26-04-2025
- Business
- Yahoo
Russia keeps key rate on hold, braces for global turbulence
By Elena Fabrichnaya and Gleb Bryanski MOSCOW (Reuters) -The Russian central bank maintained its key interest rate at 21% on Friday, with inflation starting to decline but new risks facing the Russian economy because of global economic turbulence triggered by U.S. trade tariffs. Russia has not suffered directly from high import taxes on many countries announced by U.S. President Donald Trump but is now bracing for a protracted period of lower oil prices - its main export - and declining budget revenues. "A further decrease in the growth rate of the global economy and oil prices in case of escalating trade tensions may have proinflationary effects through the rouble exchange rate dynamics," the central bank said in a statement. Central bank governor Elvira Nabiullina, who had earlier called the trade wars "a tectonic shift", said the changes happening in the global economy were now a key inflationary factor. "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," Nabiullina said. Lower oil prices mean less foreign currency revenue for Russian oil exporters, which they convert into roubles at home to pay taxes. It will reduce the supply of foreign currency and make the rouble weaker, pushing up domestic prices. INFLATION PASSED PEAK The central bank is keeping the key rate at the highest level since the early 2000s as it struggles to combat inflation. The rouble, which has surged by 37% against the dollar this year, has helped this effort by making imported goods cheaper. "Current inflationary pressures, including underlying ones, continue to decline, although remaining high," the regulator said. It maintained its 2025 inflation forecast at 7.0–8.0%, predicting inflation will return to the target of 4.0% in 2026. Nabiullina said inflation had passed its peak in the fourth quarter of 2024 but the transition to a sustainable decline in annual inflation is expected to occur in May, with a spike in July linked to a planned rise in utilities tariffs. She also said that the rouble strengthening is now seen as more sustainable than before, but its exchange rate to the U.S. dollar was still under the influence of news about Russia-U.S. talks on a peaceful settlement to the conflict in Ukraine. The central bank also left some room for further rate hikes, saying it expected an average key rate in the range of 19.5–21.5% in 2025, compared with the previous estimate of 19-22%. Nabiullina welcomed the Finance Ministry's idea to save more oil revenues in a reserve fund and create a safety cushion during a period of global turbulence, saying such a policy would also help bring inflation rates down. PREDICTABLE CONDITIONS The central bank drew strong criticism from business leaders over its interest rate policy in recent months but Nabiullina, who has the backing of Russian President Vladimir Putin, is expected to keep her job until the end of her term in 2027. The decision to keep the rate on hold was in line with the results of a Reuters poll of 25 analysts. "This decision means that the central bank is creating predictable conditions within the economy in order to reduce the uncertainty currently associated with trade wars and instability in oil prices," said Alfa Bank's Natalya Orlova. The central bank noted that economic activity slowed in the first quarter of 2025, compared with the fourth quarter of 2024. It said the share of enterprises experiencing labour shortages was also declining. The central bank maintained the 2025 growth forecast at 1-2%, below the government's forecast of 2.5%. It said that it would hold its next rate-setting meeting on June 6. Sign in to access your portfolio
Yahoo
23-04-2025
- Business
- Yahoo
Exclusive-Putin's central banker Nabiullina will serve until 2027 despite attacks, sources say
By Elena Fabrichnaya and Gleb Bryanski MOSCOW (Reuters) - Russian central bank chief Elvira Nabiullina is safe in her job for two more years with President Vladimir Putin's personal support but the Kremlin will face a succession dilemma when her record tenure ends in 2027, two senior sources told Reuters. Nabiullina, 61, has faced intense criticism from lawmakers and some prominent businessmen since she was appointed in 2013, but has always endured with Putin's backing. Rumours of her demise intensified after the bank hiked rates by 200 basis points to 21% in October in an attempt to counter the inflationary pressure of the biggest Russian military spending since the Cold War. Critics openly accused her on state television of sabotaging the Russian economy to help the United States, or of driving businesses to the brink of bankruptcy with an overly orthodox obsession with battling inflation. But Nabiullina will stay in her role until her term expires in 2027 - when, by law, she has to step down - according to two senior sources who spoke to Reuters on condition of anonymity due to the sensitivity of the situation. The sources - one senior Russian official and one top-level figure in the financial sector, both familiar with internal Kremlin discussions - told Reuters that Nabiullina was safe provided that no major policy mistakes occurred. "She is not at risk; she has a strong position," said the Russian official. When asked if the Kremlin is considering a successor, the official simply noted that her contract has two years yet to run. But some insiders are already talking about "Problem 2027", by which they mean the challenge of replacing not only Nabiullina but members of her team who may be tempted by more lucrative jobs elsewhere once she is no longer around. A senior job in Russia's central bank, although prestigious, pays less than commercial banks and carries a higher risk of coming under Western sanctions - implying lost access to travel, foreign assets and education abroad for one's children. "There is no problem now, the problem lies in 2027 when half of the central bank will leave with her, and there is simply no alternative team," said the senior financial source. RARE PRAISE The two keys to Nabiullina's longevity are the confidence of Putin and her efficiency in preserving macroeconomic stability despite Russia's conflict in Ukraine. When it started in 2022, she was lambasted simultaneously by nationalist hawks who questioned her loyalty to Putin and Kremlin critics who likened her to Adolf Hitler's war production minister Albert Speer. A source with knowledge of discussions at the central bank said that the West's decision to freeze Russia's foreign currency reserves over the conflict in Ukraine had strengthened Nabiullina's resolve to continue working. The Russian economy has performed better than expected for the past three years but is set to slow down sharply this year, stifled by high interest rates. Additionally, Russia is preparing for a period of low oil prices and slumping budget revenues as high import tariffs imposed by U.S. President Donald Trump dampen global demand, making it a bad time for Putin to change horses, sources said. "The tectonic changes in global trade are unfolding before our eyes, and it is still very difficult to judge where they will lead the global economy and how they will affect Russia," Nabiullina herself told parliament this month. In a sign that her position has strengthened in recent weeks, Nabiullina received rare praise from lawmakers during her annual report on April 9 for shielding the economy from Western sanctions and developing a national payments system. "The leadership of the central bank, as well as the parliament's banking committee, should be praised for doing everything in order to protect our country's financial system," influential Duma (parliament) speaker Vyacheslav Volodin said. (Writing by Gleb Bryanski; editing by Mark Trevelyan and Mark Heinrich)
The Star
23-04-2025
- Business
- The Star
Exclusive-Putin's central banker Nabiullina will serve until 2027 despite attacks, sources say
Governor of the Russian Central Bank Elvira Nabiullina attends a plenary session of the VTB Investment Forum 'Russia Calling' in Moscow, Russia December 4, 2024. Yuri Kochetkov/Pool via REUTERS/File Photo MOSCOW (Reuters) - Russian central bank chief Elvira Nabiullina is safe in her job for two more years with President Vladimir Putin's personal support but the Kremlin will face a succession dilemma when her record tenure ends in 2027, two senior sources told Reuters. Nabiullina, 61, has faced intense criticism from lawmakers and some prominent businessmen since she was appointed in 2013, but has always endured with Putin's backing. Rumours of her demise intensified after the bank hiked rates by 200 basis points to 21% in October in an attempt to counter the inflationary pressure of the biggest Russian military spending since the Cold War. Critics openly accused her on state television of sabotaging the Russian economy to help the United States, or of driving businesses to the brink of bankruptcy with an overly orthodox obsession with battling inflation. But Nabiullina will stay in her role until her term expires in 2027 - when, by law, she has to step down - according to two senior sources who spoke to Reuters on condition of anonymity due to the sensitivity of the situation. The sources - one senior Russian official and one top-level figure in the financial sector, both familiar with internal Kremlin discussions - told Reuters that Nabiullina was safe provided that no major policy mistakes occurred. "She is not at risk; she has a strong position," said the Russian official. When asked if the Kremlin is considering a successor, the official simply noted that her contract has two years yet to run. But some insiders are already talking about "Problem 2027", by which they mean the challenge of replacing not only Nabiullina but members of her team who may be tempted by more lucrative jobs elsewhere once she is no longer around. A senior job in Russia's central bank, although prestigious, pays less than commercial banks and carries a higher risk of coming under Western sanctions - implying lost access to travel, foreign assets and education abroad for one's children. "There is no problem now, the problem lies in 2027 when half of the central bank will leave with her, and there is simply no alternative team," said the senior financial source. RARE PRAISE The two keys to Nabiullina's longevity are the confidence of Putin and her efficiency in preserving macroeconomic stability despite Russia's conflict in Ukraine. When it started in 2022, she was lambasted simultaneously by nationalist hawks who questioned her loyalty to Putin and Kremlin critics who likened her to Adolf Hitler's war production minister Albert Speer. A source with knowledge of discussions at the central bank said that the West's decision to freeze Russia's foreign currency reserves over the conflict in Ukraine had strengthened Nabiullina's resolve to continue working. The Russian economy has performed better than expected for the past three years but is set to slow down sharply this year, stifled by high interest rates. Additionally, Russia is preparing for a period of low oil prices and slumping budget revenues as high import tariffs imposed by U.S. President Donald Trump dampen global demand, making it a bad time for Putin to change horses, sources said. "The tectonic changes in global trade are unfolding before our eyes, and it is still very difficult to judge where they will lead the global economy and how they will affect Russia," Nabiullina herself told parliament this month. In a sign that her position has strengthened in recent weeks, Nabiullina received rare praise from lawmakers during her annual report on April 9 for shielding the economy from Western sanctions and developing a national payments system. "The leadership of the central bank, as well as the parliament's banking committee, should be praised for doing everything in order to protect our country's financial system," influential Duma (parliament) speaker Vyacheslav Volodin said. (Writing by Gleb Bryanski; editing by Mark Trevelyan and Mark Heinrich)
Straits Times
23-04-2025
- Business
- Straits Times
Putin's central banker Nabiullina will serve until 2027 despite attacks, sources say
Governor of the Russian Central Bank Elvira Nabiullina attends a plenary session of the VTB Investment Forum 'Russia Calling' in Moscow, Russia December 4, 2024. Yuri Kochetkov/Pool via REUTERS/File Photo MOSCOW - Russian central bank chief Elvira Nabiullina is safe in her job for two more years with President Vladimir Putin's personal support but the Kremlin will face a succession dilemma when her record tenure ends in 2027, two senior sources told Reuters. Nabiullina, 61, has faced intense criticism from lawmakers and some prominent businessmen since she was appointed in 2013, but has always endured with Putin's backing. Rumours of her demise intensified after the bank hiked rates by 200 basis points to 21% in October in an attempt to counter the inflationary pressure of the biggest Russian military spending since the Cold War. Critics openly accused her on state television of sabotaging the Russian economy to help the United States, or of driving businesses to the brink of bankruptcy with an overly orthodox obsession with battling inflation. But Nabiullina will stay in her role until her term expires in 2027 - when, by law, she has to step down - according to two senior sources who spoke to Reuters on condition of anonymity due to the sensitivity of the situation. The sources - one senior Russian official and one top-level figure in the financial sector, both familiar with internal Kremlin discussions - told Reuters that Nabiullina was safe provided that no major policy mistakes occurred. "She is not at risk; she has a strong position," said the Russian official. When asked if the Kremlin is considering a successor, the official simply noted that her contract has two years yet to run. But some insiders are already talking about "Problem 2027", by which they mean the challenge of replacing not only Nabiullina but members of her team who may be tempted by more lucrative jobs elsewhere once she is no longer around. A senior job in Russia's central bank, although prestigious, pays less than commercial banks and carries a higher risk of coming under Western sanctions - implying lost access to travel, foreign assets and education abroad for one's children. "There is no problem now, the problem lies in 2027 when half of the central bank will leave with her, and there is simply no alternative team," said the senior financial source. RARE PRAISE The two keys to Nabiullina's longevity are the confidence of Putin and her efficiency in preserving macroeconomic stability despite Russia's conflict in Ukraine. When it started in 2022, she was lambasted simultaneously by nationalist hawks who questioned her loyalty to Putin and Kremlin critics who likened her to Adolf Hitler's war production minister Albert Speer. A source with knowledge of discussions at the central bank said that the West's decision to freeze Russia's foreign currency reserves over the conflict in Ukraine had strengthened Nabiullina's resolve to continue working. The Russian economy has performed better than expected for the past three years but is set to slow down sharply this year, stifled by high interest rates. Additionally, Russia is preparing for a period of low oil prices and slumping budget revenues as high import tariffs imposed by U.S. President Donald Trump dampen global demand, making it a bad time for Putin to change horses, sources said. "The tectonic changes in global trade are unfolding before our eyes, and it is still very difficult to judge where they will lead the global economy and how they will affect Russia," Nabiullina herself told parliament this month. In a sign that her position has strengthened in recent weeks, Nabiullina received rare praise from lawmakers during her annual report on April 9 for shielding the economy from Western sanctions and developing a national payments system. "The leadership of the central bank, as well as the parliament's banking committee, should be praised for doing everything in order to protect our country's financial system," influential Duma (parliament) speaker Vyacheslav Volodin said. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
