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Putin advisor pushes for interest rate cut
December 17, 2013, 10:29 am

The central bank has said repeatedly that it will focus on controlling inflation, and has not cut interest rates since December 2011 [Getty Images]

The central bank has said repeatedly that it will focus on controlling inflation, and has not cut interest rates since December 2011 [Getty Images]

A top Kremlin official on Tuesday called for Russia to cut interest rates to boost the economy, a move that has been consistently resisted by the central bank in its drive to fight inflation.

“We have to decide,” Andrei Belousov, an advisor to President Vladimir Putin, told reporters, Prime news agency reported. “Why have interest rates not decreased this year? Why does inflation have a general downward tendency and interest rates do not?”

Belousov, a former Economic Development Minister, said high interest rates were “killing investment activity.”

Elvira Nabiullina, appointed chairwoman of Russia’s central bank in June, has refused to cut interest rates despite a flagging economy that officials expect to grow at just 1.3 percent this year, its lowest level since 2009.

The central bank has said repeatedly that it will focus on controlling inflation, and has not cut interest rates since December 2011.

Consumer prices in Russia are expected to rise by just over 6 per cent this year, missing the central bank’s target range of between 5 percent and 6 per cent.

Deputy Prime Minister Igor Shuvalov told Bloomberg in January that there was a “huge argument” between the central bank and the government over interest rates.

A year-long tariff freeze at large state-owned companies including Gazprom, Russian Railways and major power companies will come into force on January 1.

The move is expected to temporarily reduce inflation, allowing the central bank a breathing space to cut interest rates.

 

Ria Novosti

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