Russia’s central bank governor Elvira Nabiullina gave an impassioned defence of the country’s banking sector to Communist Party lawmakers, as criticism mounts over high interest rates and inflation.
Nabiullina’s monetary policy has been called into question after the central bank jacked up interest rates to 21% last month, with powerful business figures, lobby groups and the government blaming slowing investment on exorbitant borrowing costs.
The central bank insists labour shortages are the main issue when it comes to investment, and Nabiullina, at a closed door meeting with lawmakers from Russia’s Communist Party, issued a strong rebuke to criticism of banks’ rising profits in the high-rate environment.
Nabiullina said banks had taken the biggest hit as the West targeted Russia with sweeping sanctions over its February 2022 invasion of Ukraine, with profits slumping much more than other sectors in 2022, and banks’ share of profits across the economy only just catching up to pre-war levels.
“The health of the banking system allowed us to withstand this crisis,” Nabiullina said, according to video footage published by a Communist Party lawmaker late on Tuesday. “Banks have restructured a lot of loans to companies, small and medium-sized businesses and people.”
Persistent and surging inflation has led the central bank to pursue ever tighter monetary policy and Russia has recorded a spate of butter thefts in recent weeks as dairy prices, in particular, have spiked.
Russia’s real mortgage rates, the difference between the inflation rate and the nominal interest rate, are around 12.3%, according to a BestBrokers report, among the highest in the world.
(Reporting by Alexander Marrow)
