Nabiullina admitted the need to raise rates earlier – Kommersant

Bank of Russia Chairman Elvira Nabiullina believes that the cycle of tightening monetary policy (MP) and raising the key rate should have started in the spring. The regulator announced a tightening of monetary policy and an increase in rates in July.

“Inflationary pressures began to rise in the second half of the year. And now the rate of price growth is indeed quite high, much higher than our inflation target. And yes, looking back, we understand that monetary policy was soft, and it was necessary to raise the rate earlier,” Ms. Nabiullina said in an interview with RBC. To a clarifying question from journalists when the regulator should have moved to tighten monetary policy, she answered: “For example, in the spring.”

Further decisions of the Bank of Russia on the key rate will also be influenced by the indicator of inflation expectations of the population and business, noted Elvira Nabiullina. “They are high and still growing, recent surveys have shown. High inflation expectations mean the inertia of inflation processes. And the higher inflation expectations, the more difficult it is, of course, to reduce inflation,” she emphasized.

In 2023, the Bank of Russia raised the key rate five times. First, in July, the regulator increased the rate from 7.5% to 8.5%. In mid-August, at an extraordinary meeting of the board of directors, announced against the backdrop of a rise in the dollar exchange rate above 100 rubles, the Bank of Russia immediately raised the rate by 3.5 percentage points to 12%. On September 15, the rate increased by another 1 percentage point to 13%, and on October 27 – by 2 percentage points to 15%. The regulator last announced a rate increase on December 15. Then it increased to 16%.

Read more in the Kommersant article. “Sixteen to Tone”.