Bloomberg: Putin started pressuring Russian Central Bank chief Nabiullina over key rate
Vladimir Putin, who had long kept a conspicuous distance from Russia’s monetary policy, made clear twice in July that the Central Bank needed to lower its key rate. The Bloomberg news agency reported that Putin made “unusually direct” comments shortly before the bank’s policy meeting.
Russian President Vladimir Putin began pressuring Russia's Central Bank chief, Elvira Nabiullina, over a key interest rate in July, according to Bloomberg. During a policy meeting, Putin made "unusually direct" comments, pushing the bank to lower its key rate by 25 basis points to 14%. The Central Bank claimed the move was independent, but investors were left uncertain due to the lack of a future forecast.
Economist Oleg Vyugin noted that both political pressure and complaints from large businesses contributed to the increased pressure on the Central Bank. Putin's tone with Nabiullina shifted during meetings, emphasizing the need to consider his signals. While the banking system remains independent, political factors have become more intertwined with monetary policy.
The decision to lower the interest rate will be crucial at the September meeting when the Central Bank reviews new inflation data, which is expected to be disappointing.
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