Russia central bank may lose independence after Putin nominated ally
(03-13 18:45)
The nomination by President Vladimir Putin of a close ally to head the Russian central bank puts its independence at risk and may make it more inclined to heed political pressure for looser monetary policy, economists said.
Elvira Nabiullina, 49, currently an economic advisor to Putin and whose appointment still needs rubber-stamping by parliament, is a respected economist with years of experience in government ministries, AFP reports.
But she has a reputation as a close ally of Putin who is unlikely to stand up to the Russian strongman at a time when the Bank of Russia is engaging in the tricky balancing act of trying to keep resurgent inflation in check while not braking growth.
Current incumbent Sergei Ignatyev, who is stepping down this summer after holding the post since 2002, has resisted political pressure to cut the main nterest rate which stands at 8.25 percent with inflation over 7 percent.
Economists said her choice was a compromise between a continuity candidate like deputy central bank chief Alexei Ulyukayev and a more radical pro-growth choice like VTB state bank chief Andrei Kostin.
The decision "is a blow to hopes for a more independent monetary policy over the coming years but is unlikely to lead to major changes in the current framework,'' said Neil Shearing, chief emerging markets economist at Capital Economics.
"Policy is likely to be looser than would otherwise have been the case, but even large interest rate cuts are unlikely to do much to stimulate a flagging economy.''
Ivan Tchakarov, chief economist at Renaissance Capital, said the market would see the appointment as "open political pressure'' on the bank given Nabiullina's close association with Putin.
"This could also be interpreted more broadly as further consolidation of Putin's power over key institutions in the country,'' he said in emailed comments.
But few cast doubt on the qualifications of Nabiullina, who was born in the Muslim region of Bashkortostan before receiving her academic training in Moscow.
Liberal economist Konstantin Sonin, vice rector of the New Economic School, wrote on his blog that Nabiullina was a "good choice'' largely because she would be ready to listen to different points of view on monetary policy.
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