President Vladimir Putin said he broadly agrees with the central bank’s restrictive policy, suggesting he’s siding with a view opposing monetary stimulus.
While some government members are critical of what they see as an “overly tight” monetary policy, it’s “largely justified because it’s aimed at subduing inflation,” something that’s “in the interests of citizens and the economy,” Putin said during a live televised call-in show today.
Russia’s $2 trillion economy is growing at the weakest pace since a 2009 contraction as Europe’s debt crisis curbs exports and investment and state spending is scaled back after presidential elections a year ago. Outgoing central bank Chairman Sergey Ignatiev has resisted calls to trim borrowing costs, even as government members including Economy Minister Andrei Belousov blame high interest rates for contributing to a worsening growth outlook.
Gross domestic product will rise 2.4 percent this year, according to the Economy Ministry, which downgraded an earlier projection of 3.6 percent. The central bank this month took the biggest step toward easing monetary policy since raising all rates in September, with policy makers cutting some borrowing costs on less frequently used credit instruments.
Subduing consumer-price growth should remain the focus of monetary policy, Elvira Nabiullina, who replaces Ignatiev in June, told lawmakers April 9.
While Russia has “room to maneuver” in terms of easing rates, a reduction would require slowing economic growth and higher unemployment and should be made based on a full analysis of the situation, said Nabiullina, Putin’s former economic aide.
Even if some “adjustments” may be necessary, the principles of economic policy will remain unchanged, Putin said today.
“We will primarily pay attention in the future to macroeconomic indicators and guide the real economy to meet the population’s social needs,” he said.