Nabiullina: we should learn to live in new zone, focus on own sources of financing
MOSCOW. Dec 16 (Interfax) - The head of the Central Bank of Russia, Elvira Nabiullina, has commented on the regulator's decision to sharply raise the key rate to 17% from 10.5%.
"In order to limit the negative effects of the weakening of the national currency's exchange rate, we have decided to raise the key rate from 10.5% to 17%. This is decision is directed toward lowering inflation and inflationary expectations," she said in an interview on Russia-24 television channel.
According to the Central Bank, the weakening of the national currency's exchange rate is happening due to falling prices for oil and the closure of Western capital markets for a number of Russian borrowers. Nabiullina added that the Central Bank had recently placed the ruble in free float. This will allow for the effects of negative external factors on the Russian economy to be mitigated.
She said that the weakening of the exchange rate is a signal for the Russian economy to adapt to new conditions. "We should learn to live in the new zone, focus to a large extent on our own financing sources and projects and give import substitution a chance," the Central Bank head said.
Nabiullina said the Central Bank believed that Russian companies are able to pay back foreign debt. "In order to smooth out this process, we are developing our own instruments. We are giving them forex on loan," she said.
In order for the increased rate not to stop Russian projects from developing, the Central Bank has left special instruments and their rates unchanged, Nabiullina said. This concerns investment projects, project financing, projects aimed at supporting small and medium business and commodity exports.