The strengthening ruble gives Russia room to cut interest rates if there are no other shocks to the economy, central bank Governor Elvira Nabiullina said.
The ruble’s strength is contributing to a slowdown in inflation, and “that’s why with other things being equal and no new significant negative factors, the ruble’s strengthening will allow us to cut the key rate,” Nabiullina told reporters on Thursday in Washington, where finance ministers and central bankers are gathering for International Monetary Fund meetings. “The ruble is in a more or less balanced situation,” she said.
After raising rates six times in 2014 to prop up the ruble as it slid on tumbling oil prices and U.S. and European sanctions over Ukraine, the central bank shifted to easing with two cuts this year to relieve pressure on the economy. The change of course has raised concern that the bank is caving to political pressure and compromising on its inflation goal.
The ruble has surged 22 percent this year against the dollar. The currency plunged 48 percent in 2014, helping push push the inflation rate to a 13-year high of 16.9 percent last month.
Even so, the central bank has cut the benchmark interest rate to 14 percent, from 17 percent in December, easing policy as the economy slides into its first recession in six years.
Nabiullina has previously said the bank will reduce rates further if inflation risks continue to abate. On a week-to-week basis, Russian inflation has slowed since the start of the year.
By Olga Tanas