MOSCOW Feb 14 Russian central bank Governor
Elvira Nabiullina said on Friday there was no reason to raise or
cut interest rates now, after the bank's rate-setting council
said it would have to tighten policy if inflation deviates above
A decline in the rouble's exchange rate was expected to add
a "moderate" 0.5 percentage points to inflation, Nabiullina told
a briefing after the Bank of Russia earlier held its key rate at
5.5 percent for the sixteenth meeting in a row.
Any decision to raise interest rates would be in response to
inflation, and not to defend the rouble, said Nabiullina, who
took the top job at the central bank last June.
"When we talk about the possibility of tightening our
monetary policy we do not look at it as a way of supporting the
path taken by the rouble," Nabiullina said.
"We will not make a decision to tighten monetary policy
unless we see that inflationary risks are materialising."
Economic growth has been ebbing, coming at a disappointing
1.3 percent last year and forcing the central bank to revise
down its growth forecast to between 1.5 percent and 1.8 percent
this year, below the government's forecast of 2.5 percent.
"For now, our economic growth remains rather weak and that
is why raising rates now could hamper growth," Nabiullina said.
The central bank expects that inflation, which at 6.5
percent last year exceeded the central bank's target of no more
than 6 percent, is likely to come down and reach its 5 percent
target by the end of 2014.
The central bank is pursuing a strategic shift towards a
policy of inflation targeting, which entails scaling back
currency interventions to allow the rouble to float freely by
2015. Nabiullina said there was "absolutely" no plan to delay
this despite the recent sell-off in the Russian currency.
"We're conducting a monetary policy that had been announced
earlier and in agreement with its framework we smooth out
short-term (rouble) volatility," Nabiullina said.
"And we are going to continue doing that, raising the
rouble's flexibility so by the end of the year we shift to a
free float regime."
She said the rouble appeared to be undervalued in relation
to the performance of Russia's current account, which is a broad
measure of a country's exports of goods and services, as well as
and earnings on international investments.
(Reporting by Lidia Kelly and Oksana Kobzeva; Editing by
Douglas Busvine and Jason Bush)