Posted on 06/25/2013 2:42:34 AM PDT by TexGrill
The new head of the Central Bank has vowed to continue her predecessor's battle against inflation, resisting calls for radical monetary stimulus and a weaker ruble to revive the economy.
A first interest rate cut could come in the third quarter of this year, but only if inflation is clearly falling, Elvira Nabiullina said in an interview before she takes charge at the financial regulator Monday.
In wide-ranging remarks, Nabiullina also said that without deep structural reforms and successful efforts to stamp out corruption, Russia’s $2 trillion economy cannot attain a goal of 5 percent annual growth set by the Kremlin.
"With the current structure of our institutions, 5 percent is just impossible," said Nabiullina, who has been chief economic adviser to President Vladimir Putin for the past year.
"There's no way we can achieve that with monetary policy alone. Attempting to stimulate growth with Central Bank liquidity injections would have only a short-term effect.
"The long-term impact would in all probability be negative. We could end up with stagflation," she added, referring to a toxic combination of economic stagnation and high inflation.
Her comments touched on the theme of an address by Putin to investors in St. Petersburg on Friday last week, when he admitted that Russia's era of oil-fueled growth was over and announced a drive to invest in infrastructure projects.
(Excerpt) Read more at themoscowtimes.com ...
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