Elvira Nabiullina was confirmed as the next chairman of Russia’s central bank after she told lawmakers that reining in consumer-price growth should remain the most important monetary-policy goal.
The State Duma, the lower house of parliament in Moscow, voted 360-20 with one abstention to confirm President Vladimir Putin’s nominee to lead Bank Rossii from June, when Chairman Sergey Ignatiev’s final term ends. Nabiullina, 49, will become the first woman to head a Group of Eight monetary authority.
Russia, the largest emerging-market economy to raise interest rates last year, took a first step toward easing borrowing costs by reducing some lesser-used interest rates this month. The decision followed calls from the government to do more to stimulate the economy even as inflation remains above the 6 percent top end of the regulator’s target range.
“Low inflation is a necessary condition to protect deposits and the motivation to invest in projects with long break-even periods,” Nabiullina, Putin’s aide and a former economy minister, told lawmakers before the vote. “For that reason, the gradual reduction of inflation to 3 percent to 4 percent should be the main task of monetary policy.”
The ruble gained 0.1 percent to 31.19 per dollar by 5:36 p.m. in Moscow, its strongest in a week.
Keeping the pace of price growth between 5 percent and 6 percent this year and at 4 percent to 5 percent in the next two years is a reasonable goal, according to Nabiullina. Bank Rossii shouldn’t try to cut inflation faster because “it means putting economic growth at risk,” she said.
Russia’s economy grew 2.1 percent in the fourth quarter from a year earlier, the slowest pace since a contraction in 2009. Economy Minister Andrei Belousov said the pace of growth for 2013 was unlikely to exceed 3.2 percent.
Russia has “room to maneuver” in terms of easing rates, with the main short-term repurchase rates at 5.5 percent, whereas many other countries have expended all room for cuts, Nabiullina said. Still, that would require slowing growth, higher unemployment and should be made based on a full analysis of the situation, she said.
The comments echo remarks by Ignatiev, 65, whom Nabiullina asked to stay on at the bank as an adviser. He told reporters last week that the central bank considers a number of macroeconomic indicators as well as the exchange rate and government policy when deciding on rates.
Russia should continue moving toward a flexible exchange rate, which Nabiullina said has benefited business more than “artificial steps” to weaken the ruble. Bank Rossii has gradually widened the range in which the currency trades against a basket of dollars and euros as it moves toward inflation targeting.
She also cautioned that the central bank, while focused on inflation, can’t control it fully because of factors including prices set by the government for natural monopolies. Non-monetary factors may account for as much as half of inflation in Russia, she said.
“I’m far from the position that inflation can be driven down exclusively through monetary methods,” she said, reiterating that the central bank and the government needed to coordinate policy for the best outcomes in terms of growth and inflation.