The main problem of the Russian economy
Governor of the Central Bank of Russia, Elvira Nabiullina, described the labor shortage as the main problem of the Russian economy. She made this assessment during a joint meeting. meetings State Duma committees on the financial market, budget and taxes, and economic policy.
“The real problem is not lack of money, but lack of labor. “We also see this in surveys of businesses,” said the Central Bank president.
He said that the country’s economy “uses almost all of the available resources”, unemployment in the country is 3 percent, and in some regions this figure is even lower.
According to Nabiullina, there are “almost no workers left” in Russia, and the situation is especially serious in sectors that “exceed the pre-crisis level.”
The Central Bank president cited mechanical engineering and the chemical industry as examples.
At the same time, he emphasized that it is necessary to increase labor productivity to ensure further growth of Russia’s economic indicators.
Possible increase in interest rate
The head of the Central Bank did not rule out the possibility of a new increase in the key interest rate before the end of this year; The regulator last raised the rate to 15% from 13% in October.
“The rate may remain at this level this year, but there may also be another increase,” Nabiullina said.
The rate hike has led to cash “flowing back” into banks, according to the regulator’s chief executive. He explained that there has been an increase in the volume of cash in circulation in Russia since October 2022, but with the increase in the key interest rate, deposit conditions have become attractive for Russians again, and banks now offer deposits with interest rates of 13-14. According to Nabiullina, this means “a good return on risk-free investments.”
He also stated: Central Bank plans to reduce interest rates in 2024 – This is planned to be done as inflation decreases. As Nabiullina explains, the interest rate needs to be reduced on the basis of low inflation for the emergence of “long-term money”, that is, long-term investments and loans.
“Let’s say, even if we lowered the key rate and inflation remained high, banks would not lend money long-term,” he said, emphasizing that credit institutions focus on inflation and inflation expectations.
Inflation peak passed
During the meeting of the Duma committees, Nabiullina also announced the Central Bank’s intention to maintain tight monetary policy for several quarters Inflation to return to the 4 percent target by the end of 2024. He warned that the regulator’s actions could lead to a slowdown in lending.
At the same time, the head of the Central Bank of Russia assured that the peak of inflationary pressure in Russia has passed in the third quarter of 2023, and in the future inflation will decrease and reach the target value.
“On an annual basis, inflation will only start to fall in the spring, but this is just a base effect from the first half of last year, when inflation was low,” he said.
In addition, Nabiullina said that the weakening of the ruble in the summer months was not the result of external conditions, but a result of “constant internal inflationary pressure”, so policies aimed at reducing inflation would lead to the stabilization of the Russian currency.
Central Bank and Ministry of Finance agreed on cryptocurrencies
Nabiullina said that the Bank of Russia and the Ministry of Finance have established a common position on the use of cryptocurrencies.
He said there had been “many disagreements” between the ministries but they were now “understanding”.
According to him, the regulator advocates the use of cryptocurrencies as part of an experiment in cross-border payments and recognizes the need to develop the ability to issue digital financial assets for “responsible issuers” and subject to the protection of investor rights.
In 2022, the Central Bank proposed the issuance, exchange and circulation of cryptocurrencies in Russia, calling it a threat to the well-being of citizens, and the Ministry of Finance defended the introduction of regulation of the sector and warned that the ban would lead to an increase in cryptocurrencies. The share of the informal economy and the increase in fraud.