No reason to panic over ruble exchange rate or link it to inflation, Central Bank decides how to fight price growth - Putin

MOSCOW. Nov 28 (Interfax) - The Central Bank of Russia has various tools to influence inflation, and it is up to the regulator to choose them, including the level of the key rate, Russian President Vladimir Putin said on Thursday.

"Some experts believe that if inflation is 8.5%, then a key rate of 21% is too much, the rate is too high. If you say that prices are rising, then you still have to wonder whether this rate is too high or not," he said at a press conference in Astana.

"There are tools that can fight inflation without raising the key rate. Yes, they exist, there are various Central Bank tools to regulate the banking sector," Putin said, adding that this concerned requirements for bank liquidity, issuing loans, and others.

"But it's the Central Bank specialists who, according to current Russian law, must make the final decision," Putin said.

"As for the ruble exchange rate fluctuations, this is related not only to inflation processes, this is also related to payments to the budget, it is related to oil prices. There are a lot of factors of a seasonal nature. So on the whole, in my opinion, the situation is under control, and there are certainly no grounds for panic," he said, commenting on the ruble's weakening at a journalist's request.

He said that in terms of the exchange rate "processes are not straightforward, but they are under control" not just in Russia but in neighboring countries also.

The Russian Federal State Statistics Service (Rosstat) said on Wednesday that consumer prices had risen 7.8% between the start of the year and November 25, above the Economic Development Ministry's official 7.3% forecast for the year. The ministry estimated annual inflation as of November 25 at 8.78% while it was 8.66% according to Central Bank methodology and based on Rosstat data.

The Central Bank is forecasting 8.0%-8.5% inflation in 2024. Economists told Interfax in a consensus forecast at the start of November that they thought inflation for the year would be 8.1%, compared with the 7.5% they were predicting a month previously. It is thought they will raise their forecast in the next survey in December also.

The Central Bank on October 25 hiked its key rate as much as 2 percentage points from 19% to 21% per annum, with a still hawkish policy signal. It increased the inflation forecast for this year and the years to come and said the inflation target would now be reached in 2026 rather than 2025.

The Econ Ministry is forecasting 4.5% inflation for 2025 and the Central Bank 4.5-5.0%.

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