Nabiullina predicted the lowest point of recession in the Russian economy

After the Central Bank decided to leave the key rate unchanged for the first time in a year, the main signal that observers tried to read during Elvira Nabiullina’s press conference concerned forecasts for the future. Should we expect further tightening of monetary policy, that is, an increase in the key rate, or is the hope for easing still alive? The head of the Central Bank of the Russian Federation again appeared at a press conference without a brooch, according to which they once “guessed” about the mood of the regulator, so all that remained was to trust her words.

Nabiullina called for a neutral assessment of today’s decision of the board of directors, pointing out that at the last meeting of this year, December, the focus will be on economic indicators that were relevant at that time. Everything will depend on them.

Speaking at the Valdai Forum the night before, on October 27, Russian President Vladimir Putin noted that the most difficult period in the economy of our country had already passed. He made such a conclusion based on data from various ministries and the Central Bank.

One of the questions that Elvira Nabiullina was asked today concerned this fact. The journalists asked if the Bank of Russia had really reported this state of affairs to the head of state.

The Chairman of the Central Bank in response said that the domestic economy is well adapted to the changed conditions: logistics chains are being rebuilt, enterprises are finding new markets, although the problems have not been fully resolved. So, in her opinion, the lowest point of decline in Russia’s GDP will be in the middle of next summer. “Recovery economic growth next year will start a little later than we expected, in July,” Nabiullina said.

Demand from the public sector will continue to support economic activity in the country, she said. At the same time, on the whole, the Bank of Russia improved its expectations for a decline in GDP in 2022 to 3-3.5% from 4-6% forecast in July, so that certain reasons for cautious optimism appeared in the authorities’ estimates.

In its forecast, the regulator also took into account the impact of partial mobilization. According to the Central Bank, in the coming months it will have a disinflationary effect (that is, work to contain prices), but then the effects will be pro-inflationary.

The issue of granting credit holidays to mobilized citizens was also touched upon at the press conference. As it turned out, the regulator has already recorded violations in this area. As Nabiullina said, the Central Bank received about 300 complaints from citizens against banks regarding credit holidays for the mobilized. The regulator intends to closely monitor the situation in order to prevent violations of the rights of citizens, but the head of the Central Bank did not announce the details of the measures taken during the press conference.

Of course, the topic of blocking the operation of Mir cards abroad was not passed over in silence at the press conference. Recall that since mid-September, after the US Treasury announced the possibility of introducing secondary sanctions against partners of the Russian payment system, many foreign banks began to refuse to cooperate with it.

Today, the Bank of Russia is working with foreign counterparties on alternatives to the Mir payment card, Elvira Nabiullina said. “We are working with all partners, it is built differently with each side, each side is special,” she told reporters. “We probably don’t comment on the details here, but we are trying to establish various alternative opportunities so that our citizens, who often go on tourist trips, on business, can use modern payment methods.”

The press conference also touched upon currency problems. Despite the fact that the regulator has received the right to raise cash export limits for citizens over $10,000, in practice it will not change anything yet. And it’s all about the sanctions. “So far, we do not have the opportunity to increase the cash export limits for citizens over $10,000, because we have limited access to cash currency, non-cash ones are received more actively as payment for our export goods,” the head of the Central Bank explained the state of affairs. “We will continue to look at the situation.”

At the same time, the Bank of Russia is against the forced conversion of currency into rubles: the regulator wants citizens to remain free in this matter. Russians themselves must consciously choose the currency in which they want to keep their savings.

The head of the Central Bank also drew attention to the difference in spreads in buying and selling foreign currency from banks within the country, which sometimes differs by almost two times. For example, there are credit institutions that buy dollars for 40 rubles and sell them for 75 rubles.

But here the regulator took the side of his wards. As Nabiullina pointed out, the recent increase in spreads in banks was the result of limiting the flow of cash into the country, and the regulator does not plan to interfere in their establishment. “Here, the banks themselves set these spreads, depending on how much currency citizens sell to them, for how much they are ready to sell this currency back,” Elvira Nabiullina emphasized. So going to banks for currency will remain a gambling adventure for interested Russians for a long time to come.

Read also: “Risks increase: why the Central Bank left the key rate unchanged”