* Former economy minister emerges as compromise candidate
* Seen as loyal to Putin, lacks political profile
* Kremlin wants rate cuts to boost flagging growth
By Darya Korsunskaya
MOSCOW, March 11 Kremlin aide Elvira Nabiullina
may take charge of Russia's central bank, two sources close to
the matter said, installing a technocrat willing to act on
President Vladimir Putin's call for monetary stimulus to boost
With Putin reluctant to pick an insider and other contenders
too controversial, Nabiullina, a 49-year-old economist and
ex-cabinet minister, has emerged as a compromise choice to
succeed Sergei Ignatyev, who retires in June.
Intrigue over the appointment has intensified in recent
months, with the liberal economic establishment that has
controlled fiscal and monetary policy throughout the Putin era
resisting a power grab by Kremlin economists who want to launch
a dash for growth with the help of easy money.
Suggestions that another Putin adviser, Sergei Glazyev, had
become a candidate triggered a barrage of criticism of his
statist views in the financial press.
Nabiullina, who is Putin's most senior economic adviser and
emerged as the sole viable contender over the weekend, is "not a
bad candidate", said one of the sources.
"She understands the subject and is capable of listening to
arguments," the source said, adding that Nabiullina might loosen
policy "but not radically".
Putin signalled last Thursday, the eve of Russia's
International Women's Day holiday, that he had made up his mind
but stopped short of saying whom he had picked. "It will be a
surprise. You'll like it," he told journalists.
His spokesman Dmitry Peskov declined to comment on Monday,
saying he had heard of Nabiullina's candidacy in media reports.
The Russian leader has until March 24 to nominate a
successor to Ignatyev, who is stepping down after 11 years in
which the central bank has built its credibility by bringing
inflation down into single digits.
Putin, who returned to the Kremlin last May, has shown
frustration with Russia's slowing economic growth, which at 3.4
percent last year was half the average rate during his first two
terms as president from 2000-08.
Nabiullina, whose appointment would require parliament's
rubber stamp, would head an institution that sets monetary
policy for Russia's $2.1 trillion economy and manages half a
trillion dollars in foreign reserves.
Economists say the central bank lacks genuine independence,
while Nabiullina's background as a protege of, and successor to,
former Economy Minister German Gref suggests she would readily
pursue a more expansive policy approach.
"It is obvious that the current economic slowdown is not the
fault of monetary policy - it is a much more structural
problem," said BNP Paribas economist Julia Tsepliaeva.
"At the same time Nabiullina would be more in the camp of
those who call for the stimulation of economic growth with
In contrast to the Finance Ministry under the leadership of
the still-influential Alexei Kudrin, who resigned in 2011, the
Economy Ministry has long been an advocate of spending, rather
than saving, windfall revenues from Russia's vast oil exports.
Gref, now CEO of state-controlled Sberbank,
Russia's largest, has attacked the central bank for keeping
monetary policy too tight and starving the economy of credit.
"If you think about it in institutional terms you have
someone from the president's office being appointed the central
bank governor," said Morgan Stanley economist Jacob Nell.
A perceived loss of independence and changes to the central
bank's inflation mandate might push up Russian bond yields a
little. On the other hand, added Nell: "She is a competent
economist and a good communicator, and those are positives."
Nabiullina, who rose to cabinet rank in 2007 after Gref went
into banking, and followed Putin on his return to the Kremlin,
has been seen increasingly often at the Russian leader's side.
Her appointment could undermine central bank first deputy
chairman, Alexei Ulyukayev, a hawk who has resisted rate cut
calls as inflation has topped 7 percent. Some have speculated
Ulyukayev may resign if he misses out on the top job.
The central bank is expected to hold key interest when it
next meets on Friday. Nabiullina's arrival could herald steeper
interest rate cuts in the second half of the year than might
otherwise have been expected, say economists.