Putin Aide Said to Be First Woman on Central Bank Shortlist

Kremlin Aide and Former Economy Minister Elvira Nabiullina
Kremlin aide and former economy minister Elvira Nabiullina is being considered to replace Russian central bank chairman Sergey Ignatiev, according to people with knowledge of the matter. Photographer: Andrew Harrer/Bloomberg

Elvira Nabiullina, a Kremlin aide and former economy minister, is being considered by President Vladimir Putin to replace Russian central bank Chairman Sergey Ignatiev, according to two people with knowledge of the matter.

Nabiullina, 49, joins a shortlist, the people said, asking not to be identified because the names haven’t been made public. The candidates include Ignatiev’s first deputy Alexei Ulyukayev and former finance ministers Alexei Kudrin and Mikhail Zadornov, three people with knowledge of the talks said in January.

Putin by law must name a candidate to replace Ignatiev, 65, three months before the central bank head’s third and final term ends June 24. Putin said his pick will be “unexpected” and “you’ll like it,” when speaking with reporters March 7, on the eve of Russia’s International Women’s Day holiday.

Bank Rossii will have to balance attempts to hold inflation to a range of 5 percent to 6 percent and government calls to stimulate lending. Consumer prices surged 7.3 percent in February from a year earlier, the most in 18 months, keeping the regulator from cutting interest rates, even as economic growth stumbles.

Expanded Powers

The new chairman will also oversee an expansion of the regulator’s powers as it absorbs the Federal Financial Markets Service, which now reports to the prime minister.

A majority in the State Duma, the lower house of parliament, is needed to approve the nomination. Putin’s spokesman, Dmitry Peskov, didn’t answer his mobile phone immediately when Bloomberg called seeking comment.

Putin may consider a “dark horse” candidate from outside the central bank to serve as an arbiter of bureaucratic disputes during the merger, Artem Arkhipov, chief economist for Russia at ZAO UniCredit Bank, said today. A candidate more focused on economic growth may also have merit, he said.

Before Putin’s comments last week, Ulyukayev was the favored pick, according to nine of 15 economists polled by Bloomberg, followed by Kudrin, who received three votes.

The Izvestia newspaper, which reported Nabiullina’s candidacy earlier today, said VTB Group Chief Executive Officer Andrey Kostin, VEB CEO Vladimir Dmitriev and MDM Bank Chairman Oleg Vyugin, a former head of Russia’s finanical markets watchdog, have also been considered to replace Ignatiev.

‘Sharp’ Deceleration

Nabiullina graduated with an economics degree from Moscow State University in 1986 and worked in government and private business before being appointed Economy Minister in September 2007. She held the post until May 2012 when Putin returned to the Kremlin for a third presidential term and made her an economic aide.

“Economic growth has sharply decelerated, so new initiatives, approaches, instruments and people are needed,” Arkhipov said in an interview in Moscow.

Growth slowed to 1.6 percent from a year earlier in January as industrial production contracted for the first time in more than three years. Economists are cutting their forecasts for Russia this year as Europe’s recession saps demand for commodity exports and inflation hurts household spending.

Bank Rossii’s board meets to discuss interest rates on March 15. Policy makers will keep rates on hold this week and probably “repeat last month’s comment that it hopes a lowering of inflation will allow it to cut rates in the coming months,” according to a note today from Sberbank Investment Research analysts including Chris Weafer, the chief strategist.

“Of greater interest to the market is who will be the next central bank chairman and what the appointment may signal about the continuing policy independence of the bank,” they wrote.

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