Elvira Nabiullina, Governor of the Central Bank of Russia, addressed the Federation Council’s Financial Market Development Board on July 30, 2024. In her remarks, she highlighted key issues related to monetary policy and financial market development.
Nabiullina began by emphasizing the importance of keeping inflation in check as a primary mission of the Central Bank. "Keeping inflation in check is the best contribution of the Central Bank to sustainable economic growth and protection of real household incomes," she stated.
Addressing objections about stagnant progress, Nabiullina reminded attendees that inflation had previously been reduced to 4% between 2017 and 2020. However, she acknowledged current challenges: "Our ship is in stormy and uncharted waters... but we will definitely deliver on the goal."
She noted that despite a significant rise in the key rate to 16% last December, inflation trends reversed in the second quarter of this year. Corporate lending grew at a pace of 21% year-on-year, with banks issuing loans worth 5.6 trillion rubles in the first half of the year. This was attributed to businesses' expectations for future rate declines based on past experiences.
Nabiullina also discussed fiscal stimulus impacts and noted record profits among many businesses due to unoccupied domestic market segments. She argued for higher interest rates to cool down excessive demand: "We need higher interest rates today to cool down excessive, proinflationary demand and return inflation to target."
On investment financing, Nabiullina stressed aligning government support instruments with market conditions. She advocated for targeted subsidized programmes integral to economic and social objectives while cautioning against broad subsidies which could distort markets.
The Governor also touched upon cross-border settlements impacted by sanctions and highlighted efforts towards switching to national currencies through independent financial messaging channels. She mentioned ongoing discussions about using cryptocurrencies under an experimental regime and simplifying digital financial assets for cross-border settlements.
Nabiullina announced plans for expanding the digital ruble pilot next month with a mass-scale rollout anticipated by July 2025. She reassured that its use would be voluntary: "A digital ruble offers clear advantages... We believe that these advantages will gradually make a digital ruble part of our life over five to seven years."
Addressing fraud concerns, Nabiullina emphasized measures like data exchange on droppers used by scammers and proposed cooling-off periods for sizeable loans suspected of being fraudulent.
In conclusion, she thanked the Federation Council for their constructive dialogue and support on complex initiatives aimed at protecting people's interests.