Nabiullina: Russian Central Bank is working on long cheap money

The head of the Russian Central Bank, Elvira Nabiullina, said today that the financial regulator is aware of the low availability of credit for enterprises, and plans to reduce the key interest rate, but warns that it will be done without prejudice to inflation.

"We certainly understand that at the moment the availability of credit is low, interest rates are quite high for our businesses and we intend to reduce the key rate, but not at the expense of inflation,’’ she said in a broadcast of the ‘Russia 24’ TV channel.

"We must not allow the situation where we will reduce the rates and the inflation will rise ... We analyze the state of the economy and make forecasts of our inflation, according to the information expectations to reduce the inflation to 4% by the end of 2017. And on the basis of the reduction inflation to lower the interest rates,’’ Elvira Nabiullina explained.

She noted that the Central Bank does not intend to impose any financial constraints. "There are no foreign exchange restrictions that are being considered by us. Now there is a bill that will allow citizens to change the amounts up to 40 thousand rubles without a passport, and if they exchange amount to 100 thousand rubles, the identification will take place in a simplified manner,  the head of the Central Bank said.

She also rejected the possibility of the return of the ruble from a ‘free flowing’ to a fixed rate. "I think it is almost impossible to find artificially some level of the course, which will satisfy all. Therefore we came to a floating exchange rate of the ruble, it reflects the total equilibrium of this course,’’ the head of the Central Bank said.

"When you support some artificial course, there are many negative consequences. These may be the financial ‘bubbles’ in the economy, the ruble will either go upwards or downwards - there are always the negative effects that impact the economy,’’ she concluded.