“I’m not of the opinion that there has been any urgent information over the past two weeks that would justify a rate cut,” Dmitry Polevoy, chief economist for Russia at ING Groep NV in Moscow, said by phone yesterday. “If you’re confident that you’re right in your position, then hold your line: When inflation is high, we’re not going to cut.”
The government and lawmakers are studying the possibility of expanding the central bank’s mandate to include some responsibility for ensuring economic growth, President Vladimir Putin’s spokesman, Dmitry Peskov, said March 27.
The discussions follow Putin’s March 12 nomination of his aide Elvira Nabiullina, a former economy minister, to replace Ignatiev, with lawmakers scheduled to resume hearings on the nomination April 3.
Her appointment has triggered speculation that monetary policy will be loosened after officials including Deputy Economy Minister Andrei Klepach sought lower borrowing costs to revive growth in what First Deputy Premier Igor Shuvalov called a “huge argument” between the government and policy makers.
Speaking at the Moscow conference today, Shvetsov squared off against Klepach on the virtues of harnessing monetary stimulus to unlock economic growth. Klepach said faster expansion is impossible without easing and policy adjustment by the central bank. Shvetsov rebutted the arguments, pointing to the role of government-regulated utility tariffs in fanning price growth and the risk premiums as a result of Russia’s weak judiciary system.
“The central bank is already making its contribution to economic growth,” Shvetsov said. “And it’s clear that it’s the government that’s responsible for economic growth and we are helping the government, within our purview.”