Nabiullina Plans More Growth and Less Inflation

April 9, 2013


Elvira Nabiullina, President Vladimir Putin’s candidate to lead the Central Bank, on Tuesday signaled a dovish shift in monetary policy by saying her priority would be to promote economic growth while gradually reducing inflation.

Addressing a parliamentary confirmation hearing, Nabiullina said that halving inflation to 3 to 4 percent should be a central task, but she cautioned against a hurried approach that could choke off economic growth.

“In the final analysis, the Central Bank should support economic growth with the tools at its disposal,” said the 49-year-old Kremlin economic adviser, who was nominated by Putin last month.

Nabiullina, a liberal economist and former economy minister, emerged as Putin’s surprise choice after a tough contest in which more hawkish Central Bank insiders were passed over for the job.

Her confirmation was expected to be a formality after she gave an assured performance in the State Duma on Tuesday, clearing the final hurdle for her to succeed inflation hawk Sergei Ignatyev, who retires in June.

Emphasizing a course of continuity with change, Nabiullina said that reducing inflation gradually would help create the certainty needed for investors to plan ahead and that she saw room for maneuvering to cut interest rates.

She also backed the Central Bank’s existing commitment to a flexible exchange rate and prudent management of its foreign reserves of more than $500 billion.

“Our reserves should be diversified to maximize stability and liquidity,” Nabiullina said.

Asked whether the Central Bank should expend its reserves on supporting economic growth, Nabiullina said that was a task for the government, which has announced plans to plough some of its savings into domestic investment projects.