(Reuters) -Russian Central Bank Governor Elvira Nabiullina and her deputy Alexei Zabotkin gave a news conference on Friday after the bank hiked its key interest rate to a higher-than-expected 8.5%.
The Bank of Russia officials spoke in Russian. The quotes below were translated into English by Reuters.
NABIULLINA ON IMPACT OF ROUBLE WEAKENING ON RATE DECISION
The weakening of the rouble is indeed a significant factor, but it is not the key factor.
In our opinion, the key factor for us now is the excess of demand versus the capacity to expand supply, and this is connected with constraints, including the shortage of labour.
NABIULLINA ON FOREX WITHDRAWAL RESTRICTIONS
The current restrictions are in effect until Sept. 9. We have not made a decision yet, but at the moment we can say that there are no grounds for the removal of these restrictions.
These restrictions, I remind you, were related to the fact that there are sanctions on the import of foreign currency cash by Russian banks on the territory of the Russian Federation.
NABIULLINA ON FOREX CURRENCY CONTROLS
There are a large number of various restrictions now, with exceptions, and of course it is quite difficult for businesses to navigate through it.
We are now making an inventory of the measures that have been taken, and our position is that we should keep only those currency restrictions that are significant in terms of retaliatory measures.
In our opinion, the rest should be removed and businesses should be given more opportunity and freedom to build new logistics routes and relationships with new counterparties.
NABIULLINA ON EXPORTERS SELLING FOREX
In terms of the foreign currency part of the export proceeds that come into our country, the share has not decreased in any way, our export volumes have decreased.
NABIULLINA ON RUSSIAN EXPORTS
The global economic growth rate is slowing down, and this is reflected in the prices of Russian export goods. Gas, coal and fertilisers are becoming cheaper on the global market. Russian exports are thus under double pressure – both from sanctions and the economic cycle.
NABIULLINA ON INFLATION RISKS
Pro-inflationary risks have significantly intensified over the forecast horizon. These include a possible increase in the gap between growth in demand and supply capacity, the continued higher growth rates of consumer lending and a further aggravation of staff shortages.
Other pro-inflationary risks include a sharper transfer of rouble depreciation into prices, and persistently high inflation expectations. A deterioration in external conditions, including a possible tightening of sanctions, remains a significant risk.
NABIULLINA ON FUTURE RATE DECISION
Given the changes in our assessment of the economic situation, a higher key rate trajectory will be required if we are to end next year with inflation on target near 4%.
We allow for the possibility of a further increase in the key rate at the next meetings.
(Reporting by Reuters; Editing by Kevin Liffey)
