4 Jun 2024 19:58

Russia's economy overheated, Central Bank pursuing unpleasant though rational policy - Sberbank CEO Herman Gref

MOSCOW. June 4 (Interfax) - Russia's economy has overheated, thus the strict policy pursued by the Central Bank of Russia is rational, Sberbank CEO Herman Gref said.

"A high key rate always slows down economic development, naturally. What is the Central Bank currently doing? It is applying the brakes to economic development, because the economy has obviously overheated," Gref said in the Federation Council.

"Our economy has definitely and considerably overheated; our main capacities have never been so loaded in our entire history at 84%. This is the limit, above which it is simply impossible to move," Gref said.

"I believe that the Central Bank is currently pursuing a fairly rational policy. Although it is unpleasnt, it is rational. There is no other way. We know approximately when rates were not raised for political reasons, and then how it ended. The latest example is Turkey," Gref said.

Gref said that the period of high rates must simply be weathered.

"Let us hope that the cycle could end at some moment; it is approaching its limit, and we should return to more or less normal levels," he said.

Gref said that the rise in prices is occurring amid a combination of budget and credit momentum.

Rising household incomes result in increased savings, as well as in borrowers becoming more creditworthy.

"Those who were insolvent yesterday, become creditworthy, and they begin to take out more loans despite interest rates on these loans being rather high," Gref said.