Those expecting further swingeing interest rate cuts from Russia as the country’s inflation slows, or a U.S. Federal Reserve-style bond-buying program, may be disappointed.
The Central Bank of Russia is concerned about cutting rates “too fast”, after a series of big cuts this year, Elvira Nabiullina, governor of the Central Bank of Russia, told CNBC.
Nabiullina told CNBC “Attempts to reduce the interest rates too fast or even acquire certain assets may simply lead to stronger inflation, to an outflow of capital or to dollarization of the economy, and that would slow down the economic growth, other than promote it.”
She added that the bank is ready to provide “raw liquidities” to the country’s banking system if needed.
Russia’s economy has faltered and inflation rocketed in the last year thanks to the triple shocks of sanctions from the West over its actions in Ukraine, the oil price decline, and the ruble rout.
In December 2014, the central bank shocked the market when it hiked interest rates from 10.5 percent to 17 percent as it tried to shore up the weakening ruble and combat inflation.
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