Putin news: Russia’s central bank keeps emergency interest rates | City & Business | Finance

Following President Vladimir Putin’s invasion of Ukraine, major financial restrictions were placed on Russia, leaving the central bank scrambling to prop up the rapidly plummeting ruble. In addition to closing the Russian stock market, the central bank hiked interest rates to 20 percent, a move it says “helped sustain financial stability and prevent uncontrolled price rises”. Despite its hopes, inflation soared to 12.5 percent in the first two weeks of the conflict, its highest since 2015.

Meanwhile, a crisis of confidence in the ruble has seen Russians queueing at cash machines to withdraw and change money, prompting the central bank to bring in controls on access to foreign currencies.

In a statement on Friday, March 18, the central bank said: “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.”

It also admitted indicators suggested “a deterioration of the situation in the Russian economy” with many businesses reporting production and logistics difficulties due to the sanctions imposed.

William Jackson, Chief Emerging Markets Economist at Capital Economics, noted the bank “seems to think it has done enough to stabilise the financial system”.

“While we’re wary of reading too much into this, it may suggest that policymakers’ aim (balance of payments strains permitting) to roll back capital controls, revert to a floating ruble and make the inflation-targeting regime the focus of monetary policy again.”

In a further hint of attempts to return to normality the bank’s goverour Elvira Nabiullina said the bank was ready to gradually resume trading on the Moscow Exchange.

Share trading on Moscow’s stock market has been suspended for three weeks now over fears of a mass sell off resulting in a market crash.

Speaking today Ms Nabiullina said: “The banking system is working without any flaws. The situation with liquidity has stabilized. We are fully providing banks with the necessary funds.”

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On Friday Ms Nabiullina was also tipped to continue for another term as governor after President Putin asked the State Duma to consider a proposal for a third term.

There have been rumours however that Yale educated economist has attempted to resign twice although this has been denied by the Kremlin.