WASHINGTON, April 9 Russia's central bank made
the right decision to defend the rouble in the short term and
prevent excessive volatility in the exchange rate when the
Ukraine crisis escalated, a senior official at the World Bank
said on Wednesday.
The Russian Central Bank was forced in early March to halt
its shift towards inflation targeting and instead tame the
rouble's fall after Russia seized and annexed Ukraine's Crimea.
Since then, the bank has spent nearly $30 billion in currency
"That was not a bad strategy to try to overcome that period
instead of creating a lot of volatility in the currency," said
Hans Timmer, World Bank chief economist for Europe and Central
"I would argue that the central bank should do that, look at
these other variables (currency rates, asset prices) in the
short run," Timmer said on the sidelines of the International
Monetary Fund and World Bank meeting. "But ultimately it is
their responsibility to keep inflation under control."
The Russian central bank has reiterated that its goal to let
the rouble float freely as of next year has not changed. The
rouble is down more than 7 percent against the dollar so far
this year, after falling as much as 11 percent in March.
The World Bank warned earlier this month that the Russian
economy may shrink by as much as 1.8 percent in gross domestic
product (GDP) terms if the standoff between Russia and the West
over Ukraine escalates further.
Timmer said the decision to defend the rouble should be
"If this is a much longer-term development and you will see
capital outflows that will grow and that will continue for a
long time, then the central bank will have to change its
policy," he said.
(Reporting by Lidia Kelly; Editing by Andrew Hay)