Social Media Blitz Has Russians Ask: What’s a Central Bank?by
Bank of Russia expanding its reach by turning to social media
Inflation expectations remain high despite slower price growth
Here’s what Governor Elvira Nabiullina’s latest quest to uproot high inflation expectations is up against: most Russians don’t know what a central bank is, and the price growth many of them actually face is at least double what the statisticians are reporting.
Seeing that a decline in headline inflation -- by more than half in a year -- barely dented expectations, policy makers have taken to web outlets as part of a campaign to break through to the 57 percent of Russia’s population older than 10 that Ipsos Comcon estimates are on social media. While the annual consumer-price index slipped to 7.2 percent last month from 7.5 percent in June, it again ran counter to what the central bank called a “slight” uptick in inflation expectations in July.
“In the past 30 years, our people have been living in an environment of unstable and high inflation and it’s hard for them to believe that inflation indeed would be low, once and for all,” First Deputy Governor Ksenia Yudaeva said in e-mailed comments. “In our situation there are no words that would be sufficient.”
Improving communication has been central to Nabiullina since she took over three years ago, all while navigating the nation’s biggest currency crisis since 1998 and its longest recession in two decades. Like its counterparts from Ireland to Kenya, the Bank of Russia is looking to ride the appeal of social media to deliver its message unfiltered to the audience that now matters most after its switch to inflation targeting in late 2014.
The dim outlook for prices has forced policy makers to take their time with monetary easing after their first interest-rate cut in almost a year in June. Derivatives traders have scaled back their wagers for a decrease in the next three months. Forward-rate agreements on Thursday signaled 45 basis points of reductions, down from July’s peak of 61 basis points.
Now the central bank fields questions about its rate decisions on Facebook, while Nabiullina and her deputies star in YouTube videos enhanced with graphics to spell out policy priorities and make their case for slower inflation. While its Twitter feed is mostly a newsreel with links to website statements, it’s used the account to invite people to put forward images of their cities to be featured on the new 200-ruble and 2,000 ruble notes. The campaign will culminate in a live vote on television in October.
That’s complementing other innovations like live broadcasts of Nabiullina’s briefings on the bank’s website, which also provides a wider range of data and research than ever before. The Bank of Russia has for now stayed away from the country’s two most popular social networks, VKontakte and Odnoklassniki. Within a year, the central bank will also start a website with explanatory materials on economics and financial services, according to Yudaeva.
“Unlike many other countries, in Russia the central bank has to directly engage the population,” she said. “We are conducting a rather active communication policy to bring inflation expectations down faster.”
It still has a way to go to keep up with its more tech- and media-savvy colleagues elsewhere.
The Austrian central bank’s website features a Tetris-style game devoted to the new 50-euro bill. The Czech National Bank has released an app to explain its unorthodox efforts to re-ignite price growth. On his first day in the job last year, Irish central bank Governor Philip Lane promised on YouTube to keep “in regular touch, through blogs, more video messages and also directly”.
A push into social media by central banks has picked up in recent years. As of last October, Twitter was the most popular platform, with policy makers from 72 countries operating an account, followed by YouTube and Facebook, according to the Central Banking Directory 2016.
“Central banks were late in adopting these tools,” said Niels Buenemann, now a media consultant after working for 15 years at the European Central Bank, where he was part of a team that led its move into social media. “They’ve realized that social media is a means to circumvent traditional media so that you can actually address people you want to without any intermediary.”
The Bank of Russia has already earned plaudits for its response to crises largely out of its control, from the conflict in Ukraine to the collapse in oil prices. The Euromoney magazine named Nabiullina its central bank governor of the year in 2015, and Morgan Stanley calls her the “most orthodox” central banker in developing Europe.
But challenges abound. The central bank has zeroed in on its 4 percent inflation target for next year, a level reached in modern Russian history only briefly in 2012. Policy makers have missed their goal for a fourth straight year in 2015.
That’s feeding into skepticism of Russians who remember hyperinflation in excess of 2,500 percent in the early 1990s and a spike above 10 percent last year.
What makes it an especially tall task is that a June poll by the Levada Center showed that a vast majority of respondents believe prices of goods and services bought by their families are growing far above the officially reported rate. Almost a third put perceived inflation at as fast at 50 percent. This year, the annual index has averaged 7.9 percent a month, according to data compiled by Bloomberg.
The central bank is also an enigma to most Russians. A survey commissioned and published by the central bank this year found that trust in it has declined to 42 percent of respondents last January from 46 percent a year earlier. When asked about what the central bank is, almost a fifth said it’s the first time they learned about it, while more than a third “heard something.” Only 45 percent said “they know,” according to the poll.
“It’s an institution that’s distant and not well understood,” said Lyudmila Presnyakova, a sociologist at the Public Opinion Foundation in Moscow. “On social media they connect to the most advanced and active part of society, which can take it further and transmit the message.”