Saturday, December 15, 2018

"Russia’s central bank quietly raised its key interest rate by 0.25 percentage points on Friday"

If you think having Donald Trump question the Fed head for raising rates is playing rough, just imagine working for Vlad Putin as his popularity drops.
Considering the hand she's been dealt, the chief of the Russian central bank, Ms. Nabiullina, should have garnered a couple more Euromoney Central Banker of the Year awards to sit next to the one she received in 2015.

Seriously, since she took over in 2013 oil prices collapsed, then doubled, the annexation of Crimea led to the first set of sanctions, the rouble fell 50%, the U.S. Treasury threatened Russian banks with exclusion from SWIFT, the second set of sanctions on companies and oligarchs led to the retraction of multi-billion dollar credit facilities which had to be replaced internally and a couple other things that I'm having trouble remembering.
And all the while Vladimir is looking over your shoulder.

Anyway, all good mini-rants come to an end, here's the headline story from Sputnik:
Russia’s central bank quietly raised its key interest rate by 0.25 percentage points on Friday, to 7.75 percent, for the second time in four months, amid the threat of new US sanctions.

"In the current conditions, it's very important for us to maintain our conservative approach to assessing risks and conducting monetary policy," Russian central bank Governor Elvira Nabiullina said at a recent press conference, Bloomberg reported this week. "We must make sure that inflation remains under control."

"Now, when risks are higher, it's particularly important to behave with caution. That approach is one of the most important principles in inflation-targeting policy," she said, the Financial Times reported.

"The decision taken is proactive in nature and is aimed at limiting inflation risks that remain elevated, especially over the short-term horizon. There persists uncertainty over future external conditions, as well as over the reaction of prices and inflation expectations to the upcoming VAT [value added tax] rate increase. The increase in the key rate will help prevent firm inflation anchoring at the level significantly exceeding the Bank of Russia's target," Nabiullina pointed out....MORE
Ah, here's one more thing she had to do on the fly.

When the SWIFT threat was being bandied about, Russia had no alternatives so she needed both an emergency solution and a longer term solution,
The longer term plan became the Mir payment system which inspired China's CIPS.
And the emergency solution, first proposed by the patriarch of the Russian church inspired some truly awful headlines:
"...Unorthodox Orthodox Financial Alternative"

And worse.