MOSCOW, June 15 (Reuters) - Russia's central bank will
continue raising interest rates in response to rising inflation
and does not expect this to hinder economic growth, Governor
Elvira Nabiullina said on Tuesday, days after the bank hiked its
key rate to 5.5%.
After slashing the rate to a record low of 4.25% last year
during the COVID-19 pandemic, the central bank has now raised it
three times in 2021 to slow inflation, which shot above its 4%
target in November and accelerated to 6.15% as of June 7.
"We have kept the rate low for quite a long time to make
sure we don't clip the wings of a recovering economy, but now we
have no doubt that our decisions do not hinder growth,"
Nabiullina said in the State Duma, Russia's lower house of
Nabiullina said the central bank's primary tool, monetary
policy, cools and heats the economy in much the same way that
clothes regulate body temperature.
"Inflation reduces the population's real incomes and also
depreciates savings. And monetary policy can be roughly compared
to seasonal clothes - in the cold we put on coats, summer
dresses will hang in the wardrobe until the next summer season,"
"It is exactly the same with monetary policy - it responds
to the situation in the economy, to what is happening, and helps
to achieve stability. Like the right clothes, it keeps us from
freezing and overheating."
"So now is the time to raise rates in response to changed
circumstances and rising inflation."
Nabiullina said last week that the central bank expects the
economy to return to its pre-crisis level this quarter, and also
said that a rate hike was highly probable at the bank's next
rate-setting meeting on July 23.
Earlier this month, the finance ministry said Russia would
ditch all U.S. dollar assets in its National Wealth Fund, but
Nabiullina said on Tuesday that the central bank had no plans to
halt its purchases of U.S. dollars as part of its budget rule.
(Reporting by Elena Fabrichnaya; Writing by Alexander Marrow;
Editing by Pravin Char)