The Russian Central Bank cut interest rates from 14% to 11%, after inflation slowed to 17.5% in May compared to 17.8% in April, which is now forecasting that annual inflation will decrease to 5–7% in 2023 and return to 4% in 2024.

Russian Central Bank cuts interest rates from 14% to 11%

Russia’s central bank chief warned Monday that the consequences of Western sanctions were only beginning to be felt, and Moscow’s mayor warned that 200,000 jobs were at risk in the Russian capital alone, stark acknowledgments that undermined President Vladimir Putin’s contention that sanctions had failed to destabilize the Russian economy.

The diverging assessments showed how the effect of the West’s sanctions in response to Russia’s invasion of Ukraine — and their ability to weaken Putin’s grip on power — remains uncertain nearly two months into the war.

Although experts say Russia faces an economic time bomb as its inventory of imported goods and parts runs low, Putin is using the fact that the Russian economy has not yet collapsed to bolster his contention that sanctions will not deter him.

Western sanctions, Putin said Monday in a televised videoconference with senior officials, were meant to “rapidly undermine the financial and economic situation in our country, provoke panic in the markets, the collapse of the banking system and a large-scale shortage of goods in stores.

“But we can already confidently say that this policy toward Russia has failed. The strategy of an economic blitzkrieg has failed.”

Putin was, in part, addressing a domestic audience, seeking to reassure Russians who have had to endure worries about cash shortages, a battered stock market and the shuttering of popular Western retailers such as Ikea.

Putin said he was prepared to increase government spending to stimulate the economy, an indication that continued revenues from energy exports are giving the Kremlin the flexibility to soften the blow of sanctions.

Aggressive capital controls imposed by the central bank have helped the ruble recover from its crash in the days after the invasion. And there are few reports of major layoffs or of extensive food shortages in grocery stores.

But contrary to Putin’s optimism, two senior officials cautioned Monday that the real economic pain was yet to come. Moscow Mayor Sergei Sobyanin announced a $40 million program to help people laid off by foreign companies find temporary employment and new jobs; according to his office’s estimates, he said, “around 200,000 people are at risk of losing their jobs” in the city of 13 million.

And in an appearance at the lower house of parliament, Elvia Nabiullina, chair of the Russian Central Bank, gave a more far-reaching, negative assessment. She told lawmakers that although the sanctions’ effect had largely been on the financial markets at first, they “will now begin to increasingly affect the real sectors of the economy.”

For example, she said, “practically every product” manufactured in Russia relies on imported components. Factories, for now, may still have them in stock. But because of new Western export restrictions, Russian companies will be forced to shift their supply chains or start making their own components.

“At the moment, perhaps this problem is not yet so strongly felt, because there are still reserves in the economy, but we see that sanctions are being tightened almost every day,” she said. “But the period during which the economy can live on reserves is finite.”

Nabiullina, an internationally respected central banker who reportedly tried to resign in the days after the war, said about half of the central bank’s $600 billion foreign currency and gold reserves remained frozen because of sanctions. Those reserves that the bank still controlled, she said, were mainly gold and yuan — of little use in trying to stabilize the ruble — forcing the bank to resort to capital controls such as limiting how much foreign currency can be taken out of the country.

In his televised videoconference later in the day with Nabiullina and several other officials, Putin acknowledged that the Russian economy did face some problems, including inflation. He said he had already directed the pensions and salaries of state employees — part of Putin’s political base — to be adjusted for inflation and indicated he supported greater government spending to stimulate the economy.

“The budget should actively support the economy, saturate the economy with financial resources and maintain its liquidity,” Putin said. “There are opportunities for this. Of course, we need to act carefully.”

Russia’s central bank chief warned Monday that the consequences of Western sanctions were only beginning to be felt, and Moscow’s mayor warned that 200,000 jobs were at risk in the Russian capital alone, stark acknowledgments that undermined President Vladimir Putin’s contention that sanctions had failed to destabilize the Russian economy.

Russia’s central bank chief warned Monday that the consequences of Western sanctions were only beginning to be felt, and Moscow’s mayor warned that 200,000 jobs were at risk in the Russian capital alone, stark acknowledgments that undermined President Vladimir Putin’s contention that sanctions had failed to destabilize the Russian economy. The diverging assessments showed how the effect of the West’s sanctions in response to Russia’s invasion of Ukraine — and their ability to weaken Putin’s grip on power — remains uncertain nearly two months into the war. Although experts say Russia faces an economic time bomb as its inventory of imported goods and parts runs low, Putin is using the fact that the Russian economy has not yet collapsed to bolster his contention that sanctions will not deter him. Western sanctions, Putin said Monday in a televised videoconference with senior officials, were meant to “rapidly undermine the financial and economic situation in our country, provoke panic in the markets, the collapse of the banking system and a large-scale shortage of goods in stores. “But we can already confidently say that this policy toward Russia has failed. The strategy of an economic blitzkrieg has failed.” Putin was, in part, addressing a domestic audience, seeking to reassure Russians who have had to endure worries about cash shortages, a battered stock market and the shuttering of popular Western retailers such as Ikea. Putin said he was prepared to increase government spending to stimulate the economy, an indication that continued revenues from energy exports are giving the Kremlin the flexibility to soften the blow of sanctions. Aggressive capital controls imposed by the central bank have helped the ruble recover from its crash in the days after the invasion. And there are few reports of major layoffs or of extensive food shortages in grocery stores. But contrary to Putin’s optimism, two senior officials cautioned Monday that the real economic pain was yet to come. Moscow Mayor Sergei Sobyanin announced a $40 million program to help people laid off by foreign companies find temporary employment and new jobs; according to his office’s estimates, he said, “around 200,000 people are at risk of losing their jobs” in the city of 13 million. And in an appearance at the lower house of parliament, Elvia Nabiullina, chair of the Russian Central Bank, gave a more far-reaching, negative assessment. She told lawmakers that although the sanctions’ effect had largely been on the financial markets at first, they “will now begin to increasingly affect the real sectors of the economy.” For example, she said, “practically every product” manufactured in Russia relies on imported components. Factories, for now, may still have them in stock. But because of new Western export restrictions, Russian companies will be forced to shift their supply chains or start making their own components. “At the moment, perhaps this problem is not yet so strongly felt, because there are still reserves in the economy, but we see that sanctions are being tightened almost every day,” she said. “But the period during which the economy can live on reserves is finite.” Nabiullina, an internationally respected central banker who reportedly tried to resign in the days after the war, said about half of the central bank’s $600 billion foreign currency and gold reserves remained frozen because of sanctions. Those reserves that the bank still controlled, she said, were mainly gold and yuan — of little use in trying to stabilize the ruble — forcing the bank to resort to capital controls such as limiting how much foreign currency can be taken out of the country. In his televised videoconference later in the day with Nabiullina and several other officials, Putin acknowledged that the Russian economy did face some problems, including inflation. He said he had already directed the pensions and salaries of state employees — part of Putin’s political base — to be adjusted for inflation and indicated he supported greater government spending to stimulate the economy. “The budget should actively support the economy, saturate the economy with financial resources and maintain its liquidity,” Putin said. “There are opportunities for this. Of course, we need to act carefully.”

Bleak assessments of the Russian economy clash with Putin’s rosy claims

Elvira Nabiillina, the highly regarded governor of Russia's central bank was reportedly going to step down from her post after Ukraine invasion was ordered. However, she continued on her post only when Putin asked her to stay, said Bloomberg citing sources. Russia invaded Ukraine on February 24.

She faces a hard road ahead navigating the Russian economy given the sanctions imposed on the country by the West.

Nabillina (58) is in office since 2013. She has been able to guide Russian economy through previous rounds on Western sanctions. These sanctions were imposed on Russia when it annexed Crimea.

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Nabillina's term as governor was extended last on the recommendation of Putin

On February 28, four days after Russian troops entered Ukraine, the central bank raised its main interest rate from 9.5 to 20 percent after Western nations imposed sanctions that largely cut Russia's financial sector off from the global economy.

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The Russian central bank's board held its main interest rate at 20 percent, as expected, at a regular meeting on Friday.

Nabiullina, who delivered a speech instead of holding her customary post-meeting press conference, said that it was "extremely difficult" to provide updated economic forecasts in the current conditions, but she would do so next month.

She nevertheless sought to strike a reassuring tone about the economy, saying the measures undertaken in response to the "unprecedented" Western sanctions helped avoid a run on banks and that the liquidity situation has stabilised.

"Inflation will remain elevated for a certain amount of time, but we won't allow an inflationary spiral develop," said Nabiullina.

(With inputs from agencies)

Elvira Nabiillina, the highly regarded governor of Russia's central bank was reportedly going to step down from her post after Ukraine invasion was ordered. However, she continued on her post only when Putin asked her to stay, said Bloomberg citing sources.

Elvira Nabiillina, the highly regarded governor of Russia's central bank was reportedly going to step down from her post after Ukraine invasion was ordered. However, she continued on her post only when Putin asked her to stay, said Bloomberg citing sources. Russia invaded Ukraine on February 24. She faces a hard road ahead navigating the Russian economy given the sanctions imposed on the country by the West. Nabillina (58) is in office since 2013. She has been able to guide Russian economy through previous rounds on Western sanctions. These sanctions were imposed on Russia when it annexed Crimea. Also Read | UK to provide 6,000 missiles to Ukraine; Germany says further Strela missiles on way to Kyiv Nabillina's term as governor was extended last on the recommendation of Putin On February 28, four days after Russian troops entered Ukraine, the central bank raised its main interest rate from 9.5 to 20 percent after Western nations imposed sanctions that largely cut Russia's financial sector off from the global economy. Also Read | Oksana Baulina: Russian journalist killed during bombardment in Kyiv The Russian central bank's board held its main interest rate at 20 percent, as expected, at a regular meeting on Friday. Nabiullina, who delivered a speech instead of holding her customary post-meeting press conference, said that it was "extremely difficult" to provide updated economic forecasts in the current conditions, but she would do so next month. She nevertheless sought to strike a reassuring tone about the economy, saying the measures undertaken in response to the "unprecedented" Western sanctions helped avoid a run on banks and that the liquidity situation has stabilised. "Inflation will remain elevated for a certain amount of time, but we won't allow an inflationary spiral develop," said Nabiullina. (With inputs from agencies)

Russia's central bank governor wanted to resign over Ukraine, Putin refused: Report

Russia’s central bank governor, Elvira Nabiullina, said Friday the country’s economy would decline in the coming quarters and inflation would jump further as sanctions imposed after the invasion of Ukraine take their toll. Earlier, the bank’s board of directors held interest rates at 20%.

The bank said the dramatic doubling in interest rates Feb. 28, from 9.5%, and capital controls curbing the movement of money helped sustain financial stability in Russia and stop uncontrolled price increases. But the latest inflation data shows that, as of March 11, prices in Russia rose 12.5% from a year earlier.

Russia’s war against Ukraine has led to strict economic sanctions from the United States and Europe, encouraged a large number of Western companies and banks to retreat from the country, and isolated Russia from much of the global financial system.

“The Russian economy is entering the phase of a large-scale structural transformation, which will be accompanied by a temporary but inevitable period of increased inflation,” the Russian central bank said in a statement Friday.

Gross domestic product “will decline in the next quarters,” Nabiullina said later. Two consecutive quarters of economic decline are generally considered to be a recession.

The effect of the sanctions are being keenly felt in Russia.

“Today, almost all companies are experiencing disruptions in production and logistical chains and in their settlements with foreign counterparties,” Nabiullina said. Inflation was driven higher, she said, by a rise in demand for cars, household appliances, electronic devices and other goods as people rushed to buy because they feared prices would rise higher and supplies would run out.

The ruble has lost about 30% of its value against the U.S. dollar this year.

President Vladimir Putin of Russia put Nabiullina forward for another term as central bank governor Friday. She has held the position since 2013. Nabiullina also said Friday that stock trading on the Moscow Exchange would remain closed but government bond trading would restart Monday. Stocks haven’t traded on the exchange since Feb. 25.

Russia’s central bank governor, Elvira Nabiullina, said Friday the country’s economy would decline in the coming quarters and inflation would jump further as sanctions imposed after the invasion of Ukraine take their toll.

Russia’s central bank governor, Elvira Nabiullina, said Friday the country’s economy would decline in the coming quarters and inflation would jump further as sanctions imposed after the invasion of Ukraine take their toll. Earlier, the bank’s board of directors held interest rates at 20%. The bank said the dramatic doubling in interest rates Feb. 28, from 9.5%, and capital controls curbing the movement of money helped sustain financial stability in Russia and stop uncontrolled price increases. But the latest inflation data shows that, as of March 11, prices in Russia rose 12.5% from a year earlier. Russia’s war against Ukraine has led to strict economic sanctions from the United States and Europe, encouraged a large number of Western companies and banks to retreat from the country, and isolated Russia from much of the global financial system. “The Russian economy is entering the phase of a large-scale structural transformation, which will be accompanied by a temporary but inevitable period of increased inflation,” the Russian central bank said in a statement Friday. Gross domestic product “will decline in the next quarters,” Nabiullina said later. Two consecutive quarters of economic decline are generally considered to be a recession. The effect of the sanctions are being keenly felt in Russia. “Today, almost all companies are experiencing disruptions in production and logistical chains and in their settlements with foreign counterparties,” Nabiullina said. Inflation was driven higher, she said, by a rise in demand for cars, household appliances, electronic devices and other goods as people rushed to buy because they feared prices would rise higher and supplies would run out. The ruble has lost about 30% of its value against the U.S. dollar this year. President Vladimir Putin of Russia put Nabiullina forward for another term as central bank governor Friday. She has held the position since 2013. Nabiullina also said Friday that stock trading on the Moscow Exchange would remain closed but government bond trading would restart Monday. Stocks haven’t traded on the exchange since Feb. 25.

An economic decline is coming, Russia’s Central Bank chief says

The United States Treasury Department said on Monday that the country has banned all US transactions with Russia's central bank effective immediately.

"This action effectively immobilises any assets of the Central Bank of the Russian Federation held in the United States or by US persons, wherever located," the Treasury said of the measure taken in coordination with Western allies.

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The Biden administration estimates that the move could impact “hundreds of billions of dollars” of Russian funding. Its officials said Germany, France, the UK, Italy, Japan, European Union and others will join the US in targeting the Russian central bank.

Experts believe that the move will severely limit Russia's ability to defend the ruble and prop up its economy.

The Russian currency plunged about 30 per cent against the US dollar Monday after Western nations announced moves to block some Russian banks from the SWIFT international payment system and to restrict Russia’s use of its massive foreign currency reserves.&nbsp;

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While the SWIFT move will hinder Russian banks from communicating with international peers, analysts say limiting the use of more than $630 billion in international reserves could prove even costlier for Russia.

In addition to sanctions, the US and Germany announced they will send Stinger missiles to Ukraine among other military supplies.&nbsp;

The European Union, founded to ensure peace on the continent after World War II, is supplying lethal aid for the first time, including anti-tank weapons and ammunition.

In response, Kremlin spokesman Dmitry Peskov said, "The shipments of weapons and munitions to the Ukrainian territory in our opinion could and will be a very dangerous and destabilising factor which will not in either case contribute to peace and the restoring of order in Ukraine."

Peskov called the imposition of sanctions against Russian President Vladimir Putin "absurd", and said that the Russian president was "quite indifferent about it."

"Everyone knows that the President doesn't have any assets apart from the ones he declares every year - a trailer, a flat, some bank deposits maybe," he said.

(With inputs from agencies)

The United States Treasury Department said on Monday that the country has banned all US transactions with Russia's central bank effective immediately. "This action effectively immobilises any assets of the Central Bank of the Russian Federation held in the United States or by US persons, wherever located," the Treasury said of the measure taken in coordination with Western allies.

The United States Treasury Department said on Monday that the country has banned all US transactions with Russia's central bank effective immediately. "This action effectively immobilises any assets of the Central Bank of the Russian Federation held in the United States or by US persons, wherever located," the Treasury said of the measure taken in coordination with Western allies. The Biden administration estimates that the move could impact “hundreds of billions of dollars” of Russian funding. Its officials said Germany, France, the UK, Italy, Japan, European Union and others will join the US in targeting the Russian central bank. Experts believe that the move will severely limit Russia's ability to defend the ruble and prop up its economy. The Russian currency plunged about 30 per cent against the US dollar Monday after Western nations announced moves to block some Russian banks from the SWIFT international payment system and to restrict Russia’s use of its massive foreign currency reserves. Also read | Central Bank of Russia hikes key rate to 20% from 9.5% amid sanctions While the SWIFT move will hinder Russian banks from communicating with international peers, analysts say limiting the use of more than $630 billion in international reserves could prove even costlier for Russia. In addition to sanctions, the US and Germany announced they will send Stinger missiles to Ukraine among other military supplies. The European Union, founded to ensure peace on the continent after World War II, is supplying lethal aid for the first time, including anti-tank weapons and ammunition. In response, Kremlin spokesman Dmitry Peskov said, "The shipments of weapons and munitions to the Ukrainian territory in our opinion could and will be a very dangerous and destabilising factor which will not in either case contribute to peace and the restoring of order in Ukraine." Peskov called the imposition of sanctions against Russian President Vladimir Putin "absurd", and said that the Russian president was "quite indifferent about it." "Everyone knows that the President doesn't have any assets apart from the ones he declares every year - a trailer, a flat, some bank deposits maybe," he said. (With inputs from agencies)

Ukraine invasion: United States Treasury bans transactions with Russia’s Central Bank

Russia's central bank announced Monday it was raising its key interest rate to 20 per cent from 9.5 per cent.

"The Bank of Russia's board of directors has decided to raise the key rate to 20 percent," the central bank said in a statement.

It said it was taking the emergency measure because the Russian economy's situation had "drastically changed".

The bank said that this would allow it to "support financial and price stability and protect citizens' savings from depreciation".

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Western nations ramped up the pressure with a freeze on Russia’s hard currency reserves, threatening to bring Russia’s economy to its knees.&nbsp;

While they hope to curb President Vladimir Putin’s aggression after he unleashed Europe’s biggest conflict since World War II, the measures also risked pushing an increasingly cornered Putin closer to the edge.

Russians waited in long queues outside ATMs on Sunday, worried that new Western sanctions over Moscow's invasion of Ukraine will trigger cash shortages and disrupt payments.

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Moves to block some Russian banks from the SWIFT global payments system and freeze the Bank of Russia's reserves are expected to deal a severe economic blow, although Russian authorities and lenders sought to assuage fears.

While the SWIFT move will hinder Russian banks from communicating with international peers, analysts say limiting the use of more than $630 billion in international reserves could prove even costlier for Russia.

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Sergey Aleksashenko, a former deputy chairman of the Russian central bank who now lives in the United States, said that Russia's national wealth fund would effectively disappear.

"(President Vladimir) Putin and (former Finance Minister Alexei) Kudrin built it up for years, thinking about a major war," he said. "War has come, and there is no money."

Meanwhile, rates offered for foreign exchange shot up. The rouble closed on Friday at 83 to the dollar, but some lenders were offering rates of above 100 on Sunday.

The central bank also announced a compulsory measure for companies based in Russia that earn foreign currency through exports to sell currency amounting to 80 per cent of their earnings.&nbsp;

(With inputs from agencies)

&nbsp;

Russia's central bank announced Monday it was raising its key interest rate to 20 per cent from 9.5 per cent. "The Bank of Russia's board of directors has decided to raise the key rate to 20 percent," the central bank said in a statement.

Russia's central bank announced Monday it was raising its key interest rate to 20 per cent from 9.5 per cent. "The Bank of Russia's board of directors has decided to raise the key rate to 20 percent," the central bank said in a statement. It said it was taking the emergency measure because the Russian economy's situation had "drastically changed". The bank said that this would allow it to "support financial and price stability and protect citizens' savings from depreciation". Western nations ramped up the pressure with a freeze on Russia’s hard currency reserves, threatening to bring Russia’s economy to its knees. While they hope to curb President Vladimir Putin’s aggression after he unleashed Europe’s biggest conflict since World War II, the measures also risked pushing an increasingly cornered Putin closer to the edge. Russians waited in long queues outside ATMs on Sunday, worried that new Western sanctions over Moscow's invasion of Ukraine will trigger cash shortages and disrupt payments. Also see | Ukraine attack: Wars in Europe since fall of Berlin Wall Moves to block some Russian banks from the SWIFT global payments system and freeze the Bank of Russia's reserves are expected to deal a severe economic blow, although Russian authorities and lenders sought to assuage fears. While the SWIFT move will hinder Russian banks from communicating with international peers, analysts say limiting the use of more than $630 billion in international reserves could prove even costlier for Russia. Also read | Russia's ruble falls to 117 per US dollar, a decline of 41% Sergey Aleksashenko, a former deputy chairman of the Russian central bank who now lives in the United States, said that Russia's national wealth fund would effectively disappear. "(President Vladimir) Putin and (former Finance Minister Alexei) Kudrin built it up for years, thinking about a major war," he said. "War has come, and there is no money." Meanwhile, rates offered for foreign exchange shot up. The rouble closed on Friday at 83 to the dollar, but some lenders were offering rates of above 100 on Sunday. The central bank also announced a compulsory measure for companies based in Russia that earn foreign currency through exports to sell currency amounting to 80 per cent of their earnings. (With inputs from agencies)

Central Bank of Russia hikes key rate to 20% from 9.5% amid sanctions