At central banks from Canada to New Zealand, prices of a wide basket of goods help determine the direction of interest rates. For Russia, increasingly, only one price matters: oil's.
Energy exports, already the lifeblood of the nation's economy, may now be dictating monetary policy. The head of Russia's central bank, Elvira Nabiullina says she checks the price of oil several times a day. Last year's 46 percent plunge in crude prices is making it tougher for Russia to fulfill a plan to gradually introduce an inflation-targeting strategy this year with the aim of reducing price increases to 4 percent by 2017.
Nabiullina shocked everyone with a rate cutlast month, just six weeks after raising borrowing costs to 17 percent—in an emergency fashion—from 10.5 percent as falling oil prices sent the ruble into a tailspin. When she brought the key rate back down to 15 percent, inflation was quickening—the January reading came in at 15 percent—and the ruble was sliding. The difference: Oil prices seemed to have enjoyed a bit of a bounce.
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
- Exclusive discounts on ALM and Treasury & Risk events.
- Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
*May exclude premium content
Already have an account? Sign In
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
