Bank of Russia Owes Explanation of Policy Clash, Ulyukayev Says

Russia’s central bank should better explain its policies to avoid wrong-footing investors, Economy Minister Alexey Ulyukayev said in a newspaper interview.

The bank’s commitment to inflation-targeting and a free-floating ruble exchange rate may be confusing alongside its goal of rebuilding international reserves, Ulyukayev told Kommersant in comments published Thursday. The market is starting to malfunction, he said.

“It’s necessary to explain things to the market,” said Ulyukayev, a former first deputy central bank governor who handled monetary policy. The bank “should focus the market on the rules of the game, not on targets.”

After the Ukraine crisis and plunging oil prices eroded Russia’s reserves, policy makers began buying foreign currency in May to replenish the stockpile to $500 billion. Lenders such as PAO Rosbank and ING Groep NV say the purchases contravene a November policy shift to let the ruble float freely. Governor Elvira Nabiullina says there’s no contradiction because the operations don’t target a specific exchange rate.

Ulyukayev, who was a candidate to take over the central bank in 2013, has criticized policy makers in the past and said this month’s 100 basis-point cut in the benchmark interest rate wasn’t aggressive enough.

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