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Statement by Bank of Russia Governor Elvira Nabiullina in follow-up to Board of Directors meeting on 28 April 2023

28 апреля 2023 года

Good afternoon,

Today, we have made the decision to keep the key rate at 7.50% per annum.

Inflation is slightly slower, whereas GDP growth is faster than we forecast in February. We expect that the economy will continue to recover this year. Its recovery might be accompanied by a rise in inflationary pressure, while this will depend on demand-side factors to a great extent. If we see signs of such a rise in inflation that will become a threat to the achievement of the 4% target in 2024, we will have to increase the key rate at the next meetings already.

I would now dwell on the reasons behind our decision.

Firstly, annual inflation is temporarily at lower levels.

Many people are wondering why inflation was 11% in February and then decreased three times in March to 3.5%, although prices are persistently growing. This reduction in inflation was expected — it is associated with the calculation effect of the high base.

Annual inflation equalled 11% as of the end of February, but 7.6% of this figure is the rise within this value that occurred in March 2022. After the March figure was excluded from the calculation of annual inflation, it declined significantly. This effect will remain in April as well. I would like to emphasise that this is only a temporary decrease in annual inflation and it should not be considered as the achievement of the target and stabilisation at this level. We forecast that inflation will stabilise at the target only next year. 

Steady price pressure has been intensifying in recent months. Thus, core inflation adjusted for volatile components has been rising, although now it stays below 4% in annualised terms. Moreover, the current price growth rates of the overall consumer price index, in annualised terms, have been at the level of 4% for several months already.

An important factor accelerating inflation is the rebound of consumer demand. This is evident from recent statistics on household spending, first of all in services, as well as the expansion of the demand for loans. Consumption is driven by higher wages and improving consumer sentiment. Considering these trends, we have raised the forecast growth rate of household consumption.

Nevertheless, the acceleration of inflation is limited by one-off factors that have turned out to be stronger and longer-lasting. Specifically, the record harvest of the previous year is weakening price pressure in food markets. Besides, expecting difficulties with supplies, many companies formed larger stocks of goods last year, which became possible owing to a strong exchange rate, amongst other things. Today, they are gradually selling these stocks, and this might explain why the pass-through of the ruble weakening that occurred in early 2023 to prices is relatively insignificant. Apparently, this pass-through will be more extended over time, and we will take this into account.

In April, households’ inflation expectations declined again. Currently, they slightly exceed the range of 2017–2020 when inflation was close to the target. In contrast, companies’ price expectations in most industries continued to go up.

Considering slower price growth in the first quarter and a longer-lasting effect of one-off disinflationary factors, we have decreased our inflation forecast for this year by a half of a percentage point to 4.5–6.5%. Our previous forecast was 5–7%. Indeed, we assumed that the deviation of inflation from the target might last longer than usual, so as not to hinder the structural transformation of the economy. However, 5–7% has not been our unconditional target for this year. At the moment, we can see that the adaptation of the economy progresses faster. Besides, as a result of the instantaneous and very significant shift in the price level last year, companies were able to adjust their costs to the changed conditions more quickly. Expanded demand from the government was also essential for the adjustment of the economy. However, as the economy recovers to the pre-crisis growth path, excessive demand stimulation amid insufficient supply might speed up price growth next year as well. Taking into account the time lags of the impact of monetary policy, we will need to respond promptly to this by raising the key rate.

Secondly, economic activity is recovering.

Considering a faster adaptation of the economy, we have improved the forecast of GDP growth for this year to 0.5–2.0%. By the end of next year, the economy will recover to the levels of late 2021 with the growth rate reaching 0.5–2.5%. Further on, the economy will grow by 1.5–2.5% a year.

Companies continue to adjust to the new environment. This process is supported by the expansion of private and public demand. According to our assessments, today, demand in the economy correlates with the dynamics of product and service output. A faster increase in output is impeded by resource constraints, primarily because of a rather complicated situation in the labour market.

The demand for labour continues to grow. Many companies are facing troubles with hiring personnel. This problem is especially urgent in manufacturing. As reported by the Bank of Russia’s regional branches, enterprises increased the demand for programmers, construction engineers, and low-skilled workers. This is pushing up labour costs, whereas labour productivity might be lagging behind.

Thirdly, monetary conditions remain neutral.

The slope of the yield curve of federal government bonds has become even steeper, mostly due to declining interest rates on short-term securities with maturities of no more than two years. This is the evidence that market participants’ expectations about the probability of the key rate increase have adjusted downwards. This might show how the market has responded to the statistics on current inflation.

Interest rates on long-term federal government bonds stay high beginning from last September, which is mostly explained by high uncertainty and expectations of a further expansion of the programme of borrowings by the government. In addition, pricing might be affected by limited liquidity in this market segment.

Nevertheless, even with these levels of yields on long-term federal government bonds, the credit market continued to actively expand in March. The corporate portfolio notably increased, largely driven by lending to companies engaged in large investment projects. Besides, companies were actively offering bonds. In February—April 2023, bond offerings in the market considerably exceeded the values of the same period in 2019–2021, although interest rates on corporate bonds are now higher than during the said period.

Banks’ risk appetite in the retail market was up as well. Credit institutions are very responsive to an improvement of the situation in certain industries and rising wages and are therefore ready to offer more beneficial terms to some borrowers. Furthermore, banks’ profits were high in the first quarter, as a result of which they are more confident making decisions on new loans. I would like to stress that March was only the first month of such a noticeable revival and we will need more data to assess how steady this trend is.

In addition to the growth of consumer lending, there are also other signs of a gradual reduction in households’ propensity to save. Thus, the proportion of current ruble accounts in households’ funds has returned to the peak values of the end of 2021, which implies that banks’ customers prefer a more liquid form of savings to be able to quickly use these funds for purchases.

Now, I would like to speak of external conditions.   

The world is still facing threats to financial stability, which will exert pressure on global economic growth. Nevertheless, this growth is supported by the reopening of the Chinese economy.  

Over a longer-term horizon, an important factor that will have a significant effect on the world economy will be its continuing fragmentation. Previously established goods production and delivery chains, systems of settlements, and technology development and exchange terms are altering in a fundamental way. The world economy will apparently become increasingly less integrated. These trends are additionally intensified by geopolitical frictions.

The impact of both positive and negative factors of the external environment on Russia is limited because of the sanctions. Nevertheless, these effects will translate into the Russian economy, first of all, through the demand for Russian exports, their prices and quantities.

In the first quarter, the value of exports contracted compared to last year, although it was close to the upper bound of previous years. Imports continued to expand. Considering these trends, we have slightly lowered the forecast of exports and increased the forecast of imports in our revised forecast of the balance of payments. As a result, the current account balance will decline to $47 billion this year.

I will now speak of the risks that might cause a deviation of inflation from the baseline forecast.

Proinflationary risks are still higher. In the first place, this is the risk of a possible tightening of the sanctions. The second risk is a stronger deficit in the labour market, which might restrain the structural transformation of the economy and push up prices. The third risk is that supply in production and service markets will lag behind the expansion of consumer demand.

Besides, we will continue to closely monitor the progress of the implementation of fiscal policy. Our baseline scenario relies on the current budget targets. If the budget deficit increases further over the medium-term horizon, we might need to tighten our monetary policy. I would like to emphasise that this is the size of the structural deficit, rather than budget expenditure, that is essential for us in decision-making.

As to disinflationary risks, it is possible to speak of a high propensity to save among households if this trend continues for a longer period. In addition, the increased stocks of agricultural products might contain food price growth further.

Winding up, I would like to comment on our future decisions.

Because of the time-lagged effects of monetary policy, our future decisions on the key rate will influence increasingly more the inflation rate of the next year already when inflation should return to the target of 4% and stabilise at this level. The overall uncertainty is persistently high over this time horizon. The range of risks is wide. Moreover, proinflationary risks still prevail. However, disinflationary factors might turn out to be longer-lasting. Our updated forecast of the average key rate is 7.3–8.2% for this year and 6.5–7.5% for 2024. These ranges assume that our decisions might vary. At the moment, we predict a gradual increase in inflationary pressure until the end of the year. At our next meetings, we will continue to assess whether it is reasonable to raise the key rate in order to stabilise inflation at the target of close to 4% in 2024 and further on.

Thank you for attention.

Q&A for the Media

QUESTION from Interfax:

When will the weakening of the ruble ultimately pass through to prices, in your opinion? Will this effect be significant or, owing to the stocks available, will it be extended over time so that we will not even notice it?

Another question is about the FX market. What should be the limit on foreign currency purchases within transactions for unfriendly foreigners’ exit from Russia and the sale of their assets in Russia so that this limit could smooth out the volatility of the FX market? Can it total $150 million as was set in separate cases for one-off transactions, as we know?

One more question, if I may. Is there any discussion now about the transfer of foreign banks’ subsidiaries under the control of Russian banks in connection with the President’s new executive order? Do you support yesterday’s announcement by the Ministry of Finance that foreign assets will be transferred under the control of those Russian companies that have been adversely affected abroad?


The weakening of the ruble is already impacting inflation anyway. There are simply other factors as well that have a disinflationary effect. Indeed, we believe that this pass-through will be more extended over time. It is currently contained by the factor that I have mentioned: many companies formed their stocks earlier, formed larger stocks and at a time when the ruble was stronger. However, the ruble depreciation at the beginning of the year, even if the exchange rate remains at its current levels, will be a proinflationary factor.

As regards the limits for decisions on payments abroad to be made by the Government Commission, we support the establishment of such limits. I think that particular parameters will be announced by the Government Commission as this decision is within its competence.

We do believe that the setting of such limits will help reduce volatility because such transactions, especially when they are large, might induce short-term volatility in the FX market.

Nonetheless, I would like to reiterate that this does not imply that we are going to influence the exchange rate this way. The exchange rate remains floating.

Speaking of the possible transfer of Russian assets instead of permitting the exit of foreign owners, these decisions should be based on very solid grounds associated with the stable functioning of the Russian economy. We do not consider this reasonable in the banking sector.

QUESTION from Kommersant:

The inflation forecast for 2023–2024 is approximately 0.5% lower than you expected. Nevertheless, you have not changed your signal and are simply stating more clearly in your speech that the Bank of Russia will consider, in a number of cases, a possible increase rather than a decrease in the key rate at the next meetings, which is understandable.

Have you tightened the signal in your speech intentionally or is this a wrong impression and it has remained the same? What are the current monetary conditions? Have they tightened, eased or remained the same after you revised your forecast?


We believe that monetary conditions remain neutral, approximately the same, although there are fluctuations and a certain heterogeneity.

Indeed, our rationale is that proinflationary risks prevail. Although, as you can see, our forecast of the key rate for 2023 assumes a certain probability of its reduction, we still consider that it is more likely to be raised.

I cannot say for sure how much this likelihood has increased or decreased — we will be monitoring multiple factors. However, probably, an important aspect to be emphasised once again is that we are currently analysing how our decisions will be impacting inflation next year since we reaffirm our determination to bring inflation back to its 4% target next year. This year, inflation might be higher than the target because the structural adaptation is progressing faster, but we will take into account all risks in order to return inflation to 4%.


I would like to add that the revision of the forecast, I suppose, cannot influence monetary conditions. Monetary conditions can rather be impacted by our monetary policy. Therefore, we will assess whether it is reasonable to raise the key rate so as to bring inflation to its 4% target next year.

QUESTION from Kurskaya Pravda:

Nevertheless, I would like to ask another question about inflation. As has already been said, inflation has declined. You have explained why. However, due to a weaker ruble, the Russian economy and businesses badly need funding. Accordingly, why is not the Central Bank considering a possible reduction in the key rate or is such a decision still probable?


The fact that annual inflation is going down is not a reason to cut the key rate. Our monetary policy has a time-lagged effect on the economy focusing on the future, future inflation, including households’, businesses’ and investors’ inflation expectations.

The annual inflation rate, which is really declining, is about the past as it reflects the average price growth over the past 12 months. Inflation was really very low in the second half of the previous year, but it has been accelerating since the fourth quarter. Today, seasonally adjusted monthly price growth rates are already close to 4%.

Hence, the rapid slowdown in inflation reflected in the annual figures already happened last summer. We then responded to that by reducing the key rate quite quickly, both last summer and in September, namely from 20% to 7.5%.

Therefore, to achieve the inflation target of 4% next year, we do not see any grounds currently for cutting the key rate. Nevertheless, price stability is essential to ensure the affordability of loans for the economy and businesses. Predictably low inflation makes loans needed for the structural transformation of the economy more affordable.

QUESTION from TASS Agency:

I have several questions. The first one is as follows. What were the alternative key rate decisions that the Board of Directors discussed today?

My second question is about mortgage lending. Recently, there have been many proposals regarding subsidised mortgages, for example, subsidised mortgages for public officials or the expansion of the programme to encompass the secondary market. What is the regulator’s opinion about these proposals and do you take part in this discussion?


The Board of Directors considered two alternatives at today’s meeting: to raise the key rate or to keep it unchanged. The decision was to maintain the key rate at its current level, but we did consider its possible increase.

Speaking of the development of mortgage lending and the programmes you’ve mentioned, we have not seen any particular proposals on subsidised mortgage programmes for public officials. As far as I understand, the question is simply about changing the mechanism for supporting public officials and shifting from subsidies to subsidised mortgages. Probably, this will help a larger number of public officials improve their living conditions, maybe even if the parameters of the support remain generally the same.

As regards subsidised lending for the secondary market, you know our general view that large-scale subsidised programmes are efficient as anti-crisis measures, but should then be phased out and replaced with targeted programmes.

As to targeted programmes, I consider that it would be very useful to implement them in the secondary market as well because targeted programmes support not developers but rather particular categories of people. Accordingly, it does not matter whether they purchase new or existing housing to improve their living conditions. Therefore, we believe that they could be expanded to the secondary market as well.

QUESTION from Russia 24 TV channel:

First of all, I would like to support the opinion of the US Fed Chair Jerome Powell who praised the Central Bank’s efforts a few days ago saying that you had done things to enable the Russians to avoid the sanctions to the maximum extent possible. This is the opinion he expressed. I would like to wish you resilience in the future.

Secondly, I would like to ask a question about people’s voluntary savings, the system that you have been developing jointly with the Ministry of Finance. According to the Ministry of Finance, returns on these savings will be even higher than returns on bank deposits. How can this be guaranteed and achieved?


Indeed, the development of voluntary savings, long-term savings is an important priority in our joint efforts with the Ministry of Finance as long as this will help provide both new forms of long-term savings to people and longer-term resources to the economy.

Voluntary savings can really generate higher returns, compared to deposits, as investments are made for a long period and the portfolio of various assets may be sufficiently diversified and broad. There is no need to invest in short-term securities, there can also be long-term ones. Therefore, this is quite possible. As regards non-governmental pension funds, for instance, we are certainly closely monitoring their investment strategies to ensure that they select the most attractive assets considering the options available, protecting the rights of both future pensioners and people investing their long-term funds.

Besides, this form can be more attractive because guarantees will cover a larger amount, compared to deposits.

QUESTION from Kaliningrad.ru:

My question is about the digital ruble. Won’t the introduction of the digital ruble cause an outflow of funds from the banking sector and, accordingly, an increase in credit rates due to a contraction in the issue of loans? How will the adoption of the digital ruble influence future monetary policy decisions in general?


We do not expect that the introduction of the digital ruble will cause a significant outflow of funds from bank accounts. Why? Firstly, this is because we will not accrue interest on the balances in people’s digital accounts. Normally, banks do accrue interest on the funds that people and businesses hold in bank accounts. We view the digital ruble, in the first place, as a means to make settlements, a payment instrument, rather than as a store of value. This will also prevent competition of the digital ruble with funds in bank accounts. We are also going to establish monthly limits on the amounts that people may transfer from their non-cash accounts with banks to digital wallets. Besides, if a person has been making savings for several months, the transfer of the entire amount will be fee-free. Currently, we are discussing the amount of ₽300,000, which is exactly the limit on transfers from non-cash accounts to digital wallets.

Moreover, we are always monitoring banks’ liquidity and are ready to support them. We have all necessary instruments to do this. As you know, there were some cases last year when people were withdrawing cash from their bank accounts, namely in March and September, but then they calmed down and returned their funds to banks. Anyway, we have a set of instruments to provide liquidity to banks in such a situation.

Speaking of how the digital ruble might impact lending, in the first place, the level of interest rates in the economy depends on the key rate, the Central Bank’s monetary policy in general, confidence in this policy, and confidence in our determination to bring inflation back to its 4% target. The introduction of the digital ruble will not affect this in any way.

We will take into account the demand for the new form of money when setting the parameters of our liquidity-providing or -absorbing operations. We always factor in these parameters. The digital ruble is just another form of money to be taken into account. There are no issues in terms of the effectiveness of our operational procedure.

Furthermore, we believe that the adoption of the digital ruble will have a positive effect on the development of the financial sector and, in the first place, will increase the accessibility of financial services for people and businesses and the competition among banks. Accordingly, this will, to the contrary, encourage banks to offer more favourable terms to people: they will accrue interest on current accounts and reduce barriers for money transfers as people will always have such an option as the digital ruble.

QUESTION from RIA Novosti:

My first question is about the key rate. How considerable should be an increase in inflation and the budget deficit, according to the Central Bank’s estimate, to make the Central Bank start raising the key rate?

And question two, please. You have said that annual inflation is to speed up in the second half of the year. Will this acceleration be notable? Can the inflation rate return to double digits?


When we set the key rate, we assess the entire range of factors and the entire range of risks. We cannot say that a particular factor should reach a certain level, after which we will need to raise the key rate. We analyse the entire range of factors that will be influencing the process of returning inflation to its 4% target. Accordingly, in this regard, there is no particular level of current inflation that could be such a trigger, and the more so there is no particular size of the budget deficit either.

We do take into account current inflation, but we always focus on the steady factors of inflation, their trends and forecast movements. Of course, we factor in fiscal policy as well. As I have already said, we rely on the current budget targets of the Government. However, if the budget deficit, the structural deficit expands, this will be one of the grounds for monetary policy tightening.

Nevertheless, we will need to analyse again the entire range of factors as there might also be disinflationary factors that will be offseting the impact of these proinflationary ones.

As regards inflation dynamics in the second half of the year, indeed, there are proinflationary factors. We expect inflation to speed up somewhat in stable components. Currently, they are slightly lower than 4%. We do not expect double-digit inflation rates.

QUESTION from the InvestFuture project:

My first question is about frozen shares. It was reported on the internet that a Russian man, although with a permanent place of residence in another country, had succeeded in the unblocking of the shares at an individual request. Is this true? Do you know anything about this case and can we hope that this might become a trend? Is there any progress in this area in general?

My second question is about limiting access to and trading in the shares of unfriendly states’ defence sector. The matter is that many investors purchased these shares earlier, and now they are frozen. The question is as follows. Will these securities be delisted from SPB Exchange and, accordingly, will people have a chance to divest from these assets after the securities are unblocked without losing their money?

My third question is about the new type of individual investment accounts (IIAs) as there are many unclear aspects in this regard as well. First of all, I would like to find out whether it will be possible to receive a tax deduction for a contribution only once or throughout the entire life cycle of an IIA on an annual basis, as now.

The second aspect I would like to clarify is whether it is possible to withdraw the funds only in emergency circumstances and they are to be withdrawn to a medical institution’s account, or it will be allowed, as now, to withdraw the funds simply by closing the IIA losing the right to the tax deduction.


As to the frozen assets, we now know only a few cases of both permits and refusals. Currently, we do not see any trend towards the unblocking. Nevertheless, the National Settlement Depository and relevant professional market participants continue their efforts in order to protect the rights of Russian retail investors.

As regards access to unfriendly states’ securities related to the defence industrial complex, indeed, trading in these securities is supposed to be prohibited. However, this will probably involve their delisting.

Of course, one of the issues to be addressed in this connection is the way how people who purchased those securities, as there were such permits, will be able to divest from them. This issue needs to be explored.

Speaking of the new type of an IIA and money withdrawals, it is supposed to allow the use of the funds held in an IIA in difficult situations, and such cases will be stipulated. This is not about the opportunity of withdrawing the funds at any moment. This will only be allowed in such life situations, a person will have to prove that such circumstances have occurred. I hope that this procedure will not be heavily bureaucratic. The list of such life situations will be broad enough. People will be facing such challenging situations. Therefore, we believe it important to make long-term savings more attractive, including the new type of IIAs that are becoming long-term.

QUESTION from Izvestia:

Already now, you are taking measures in relation to banks participating in the programmes of mortgage lending at excessively low interest rates. Besides, you have warned of the risks of tranche mortgages. My first question is as follows. Will there be any regulation of tranche mortgages and are there any new, similar tricks invented instead of those being removed?

And question two, please. Recently, we have suddenly learnt from the President’s statement, strange as it may seem, and then this theme was picked up, that 80% of new houses in Russia have not been sold. There is a certain surplus in the market, and there are regions, which are already included in relevant rankings, that have the highest percentages of unsold housing. How is the Central Bank monitoring this process and how might this affect housing prices and, consequently, inflation as the real estate market is strongly tied to consumer demand, purchases of construction materials, repairs, and so on?


As regards tranche mortgages, currently, we do not observe a wide spread of such schemes. We are monitoring this market and, if we notice a spread of such mechanisms, we will be taking measures. Accordingly, we are both notifying banks and stating publicly in general that we do not support such tranche mortgages.

If this lending develops, we will apply rather tight regulation. At the moment, we do not see any new schemes, but they might emerge at any moment. Both in 2022 and 2021, we could see how quickly such schemes were invented. Therefore, this is an issue for continuous monitoring.

As to the surplus in the housing market, the situation varies across regions. Indeed, some regions have a slightly larger share of unsold housing. In my opinion, this is the result of a surge in prices in previous years, a very fast rise in prices for new housing, among other factors. Nevertheless, we firmly believe that, even despite this surplus of unsold housing, it shall not be sold to people who are unable to service mortgage loans, it shall not be sold through an expansion of high-risk mortgage lending.

I think that this surplus will be gradually decreasing. Possibly, price growth should slow down for this and will be slowing down. As such, this might also push up the demand for mortgages. However, we are closely monitoring this situation. You are right, we are paying attention to, concerned about all the indicators of the housing market as it is essential to avoid high-risk mortgage lending and any systemic consequences.

QUESTION from Reuters:

Is the discussion about an increase in the key rate fading away and did the support of this option decrease at the April meeting, compared to March?

And question two, please. The Central Bank and the Ministry of Finance are now discussing the limit on the transactions of the foreigners divesting from Russian assets. Were they previously purchasing foreign currency in the market without any restrictions?


The discussion about raising the key rate is not fading away. As I have already said, we considered this option at the Board of Directors’ meeting. As to the support of this option at today’s meeting, I think, it did not decrease, although it is just an estimate, but I guess it was the same.

Speaking of the limits, when the Government Commission was making a decision to permit a transaction and, accordingly, the subsequent money transfer, this was done without any particular schedule, any particular limits. This is really so. As I have already said, that sometimes caused certain fluctuations in the FX market, if such transactions were large. Hence, we support the idea of establishing such limits and, accordingly, schedules.

QUESTION from Rossiyskaya Gazeta:

Do you have any plans to release statistics on the banking sector broken down by ‘friendly’ and ‘toxic’ currency? If yes, when are you planning to do this?

Besides, I would like to return to the pass-through of the ruble weakening to inflation indicators. You have mentioned that this process will be extended over time. However, you have decreased the inflation forecast by 0.5 percentage points. Does this mean that this pass-through will be observed not this year, but only next year?

Do you support analysts’ opinion that the main factors of the ruble weakening have already materialised?


As regards the disclosure of statistics separately on friendly and unfriendly states’ currencies, we are currently considering this issue. We have not made any decision yet, but we are aware that both banks and analysts need this information to be able to understand the situation with liquidity in the market and the structure of this liquidity. Therefore, I hope that we will make a decision soon and estimate all consequences.

Speaking of the pass-through of a weaker ruble to prices, this process is taking place and will continue. It might happen during different periods, but it will take place. As I have already said, even if the exchange rate stays at its current level, it will be a proinflationary factor, including this year.

As to the reasons why, despite this, we have reduced the inflation forecast for this year, first of all, we have already received actual figures for almost four months.

Secondly, we estimate that one-off disinflationary factors will be longer-lasting, for instance, the factors associated with the stocks of the previous year’s harvest that was rather large. This year, the harvest is also expected to be quite good. In other words, it might also have the effect of a disinflationary factor.

Would you like to add anything, Mr Zabotkin, specifically on whether the factor of the ruble weakening has already materialised or not?


I guess that we have already spoken many times of the factor of the ruble weakening. That is to say that we can observe a reduction in the value of exports and, simultaneously, a recovery of imports that is actually rather fast. Both factors were observed at the end of last year and throughout the first quarter this year. Accordingly, the resulting weakening of the current account caused the depreciation of the ruble. Besides, the exchange rate is still in the same range where it has been fluctuating in recent years.

Speaking of the revision of the forecast (the same question was asked by Dmitry Burin from Kommersant), I would like to emphasise that the reduction in the forecast by 0.5 percentage points is largely associated with a more successful adjustment of the economy, its adaptation, primarily as regards the availability of imported goods.

Therefore, the supply-side constraints having a proinflationary effect that were caused by last year’s sanctions are being eliminated more successfully than assumed before. Accordingly, the inflation components related to this will be lower this year.


Not so long ago you mentioned that the set of the FX restrictions would not be altered considerably, while admitting the possibility of a certain adjustment. Could you please clarify what this means? Does this mean a tightening or an easing of the current FX restrictions?

My second question is about Russian investors’ assets that have been frozen. In February, you suspended the discussion of the issue about the creation of the compensation fund as there were statements about the unblocking and the work in progress. Don’t you think that, today, it would be worth returning to the issue of the compensation fund, considering that there is no trend towards the unblocking and there are no licences?


Speaking of the FX restrictions and their adjustment, this is not directly about their easing or tightening. First of all, this is about an adjustment of the FX restrictions for legal entities. The matter is that we have been receiving applications from various companies explaining their specifics in the course of foreign trade. We are ready and able to take this into account, provided that the existing FX restrictions are adjusted. Our objective in this regard is to prevent a situation where the FX restrictions considerably hinder external economic activity. I would like to stress that this is about legal entities in the first place.

As regards the idea of the establishment of the compensation fund, we were discussing it. Then, there were hopes for the unblocking of the assets of Russian investors who were not sanctioned but had invested in foreign securities. We can now see that this process has not become a trend yet. Nevertheless, in our opinion, it would be quite difficult to realise the idea of such a fund. We are currently discussing other alternatives, including those suggested by businesses, and are now looking for the best options.

However, there are no final decisions yet as almost all the options are rather complicated. In addition to the fact that they would require changes to laws, we need to be confident that Russian investors’ rights are protected and that these decisions will not be challenged, it is necessary to assess whether this will require decisions from foreign regulators that will be difficult to obtain.

Therefore, we are now discussing multiple alternatives, while the idea of the compensation fund still seems quite hard to be realised.

QUESTION from Frank Media:

I’ve got a question related to federal government bonds localised in Russia. The value of these securities that have been relocated to Russia, if it is possible to say so, is rather high. Currently, transactions with them are limited. However, it would be interesting to learn the strategy of the financial authorities. Are you hoping that these securities will be dutifully held to maturity or do you have other options of how the market can cope with the surplus of these securities and avoid pressure on the yield curve of federal government bonds?

There was a hypothesis that the targeted easing granted to sanctioned banks for the purchase of localised securities could put pressure on the ruble in April. Is there really a grain of truth in this?

I would like to find out whether there was a large number of transactions for the accounting of liabilities through these securities, through the localised federal government bonds?

I have another question about mortgages at close-to-zero interest rates. As this issue — I would like to believe — is coming to an end, it would be very interesting to find out the amount of mortgages at close-to-zero interest rates that is currently on banks’ balance sheets. Do you think that such portfolios are toxic in terms of the accounting of incomes received by banks through such loans? Has the Central Bank managed to mitigate the risks of cheap mortgages, in your opinion? How large should be the provisions to be formed by banks under the new requirements? What are your expectations?


As regards the federal government bonds purchased from foreigners, from non-residents by Russian market participants, they are really holding them in their portfolios to maturity. Currently, our view remains the same: we believe, that these securities should remain in the portfolios. We do not see any breaches of this procedure.

Indeed, a certain part of the liabilities have been repaid through federal government bonds. I do not have these figures now ready at hand, but there were transactions, although not frequently. It would be impossible to say that they were very significant. They were neither small, nor significant, let’s say their amounts had a minor effect on the financial situation in general.

As to the impact on the exchange rate in April, we believe that the situation with the transactions between residents and non-residents for buying back federal government bonds had no influence on the exchange rate in April. The exchange rate was mostly affected by the current account, changes in exports and imports because the main transactions to sell and purchase these federal government bonds were conducted last year. If they had any effect on the exchange rate, that happened last year for the most part.

Speaking of mortgages at close-to-zero interest rates, we estimate that subsidised mortgages from developers total about ₽800 billion, which is 5% in the overall amount of mortgage loans. In other words, this does not involve any serious problem for banks’ mortgage loan portfolio. We were concerned about a very fast increase in these mortgages. In our opinion, we have managed to prevent the exacerbation of this problem and will continue to do this as we have introduced the relevant regulation.

As to probable materialisation of the risks related to the said 5% of the mortgage portfolio, this depends on how the situation in the housing market will be developing further on. These risks might occur when prices in the housing market do not go up, while an apartment purchased using a mortgage loan from a developer was already overpriced as it was bought in the primary market, whereas the buyer, for instance, will need to sell that apartment in the secondary market due to changed life circumstances. In our opinion, the risk related to that part of the portfolio might stay elevated for approximately three to five years of the life cycle of such a loan.

We can see that banks notified developers of the new regulation back at the end of last year. Mortgages at close-to-zero interest rates are not issued any longer since the beginning of this year. However, there are now mortgages issued at 3–5% that also involve overpricing of apartments, but not as considerable. Currently, we can see that this mortgage lending is coming to an end, nonetheless. The regulation is efficient.

As regards provisioning, the requirements for increased provisions are applicable to new loans issued beginning on 15 March, that is, the regulation became effective on 1 April, but is applicable to the portfolio from 15 March.

Therefore, if banks continue to issue such new mortgage loans, they will certainly have to form the required provisions.

QUESTION from NTV channel:

The Central Bank has repeatedly objected to cryptocurrency circulation in Russia due to risks for people, while supporting the introduction of the digital ruble. Does the digital ruble involve any risks for people?


The digital ruble and cryptocurrencies are totally different things, they are completely different. The digital ruble involves no risks — this is a national form of money, and it is absolutely clear who is in charge of this digital ruble and who issues it. In contrast, cryptocurrencies are not backed by anything, it is unclear who is responsible for them, and they are very volatile. Just as cash and non-cash rubles, digital rubles are a form of the national currency. Therefore, the digital ruble involves no risks.

QUESTION from the Prosto o Finansakh podcast (Kirovsk):

What amount of digital rubles are you planning to issue in circulation from 2024 to 2026?

And question two, please. It has been announced that digital ruble transactions will be possible without internet connection. Could you please clarify how this will function and when it is planned to be implemented?


The Bank of Russia sets not target amounts of the digital ruble. There is no objective to increase the quantity of digital rubles either. We believe that the new option in the form of the digital ruble will benefit people in the first place, including if they hold their money in current accounts as they now do for making money transfers, without banks accruing interest. Banks will start accruing higher interest on such current accounts as people will have a fee-free alternative. Most probably, this will help increase people’s incomes from their holdings with banks.

The amount of digital rubles to be issued will depend on people’s and businesses’ demand for the use of the digital ruble. It will be totally voluntary: people will choose at their own discretion whether they prefer to use cash, non-cash or digital rubles in each particular case. This is also related to pensions and salaries payable, for instance, to public sector employees.

As I have already said, we are, nonetheless, planning to establish a limit on the replenishment of digital wallets from non-cash accounts. This is needed for banks to be able to predict a potential outflow of funds into digital rubles.

As you know, we have carried out the testing and are going to start the piloting of the digital ruble that should be successfully completed before its introduction. We will proceed with the piloting for as long as needed, at least until the end of this year or maybe for a longer period.

Speaking of the technology of using digital rubles where there is no access to the internet, we believe that this is a potential advantage of the digital ruble. We are working on this as it is a complicated technological task which is now being explored. We will be able to speak of exact dates when we are confident that the technology is ready.

QUESTION from Argumenty i Fakty:

My first question is about the digital ruble. You are saying that this is a form of the national currency that is equivalent to the cash and non-cash ruble. However, the digital ruble is not a store of value and no interest is accrued on it, which makes it unprofitable to just hold digital rubles in an account. Don’t you see any inconsistency in the fact that one of the forms of the national currency is not a store of value as this is one of the main features of money?

My second question is about the exchange rate. When Russian men were called up for the partial mobilisation in autumn, they could purchase a larger quantity of goods for ₽200,000 than for $3,000 — currently, this is notably less than $3,000. Will not it happen so that when they return from the trenches, they will find out that they can purchase a much smaller quantity of imported and domestic goods for this amount of rubles?

My third question is about Indian rupees. India is actively purchasing crude and other commodities from Russia for rupees. Experts say that exporters are facing difficulties with withdrawing rupees from Indian banks’ accounts back to Russia. Does the Bank of Russia see any problem in this regard?

Speaking generally, when financial instruments in rupees become available to individuals in Russia, would you be able to recommend ordinary people to consider buying them?


Speaking of digital rubles and the opportunity to make holdings in them, indeed, we view the digital ruble as a means of payment rather than as a store of value. Why? This is because it will be possible to make fee-free transfers, but no interest will be accrued. Why are we saying that the digital ruble is not a store of value? It is possible to make holdings in digital rubles if you wish to — there is no problem with this.

However, when we are talking of savings, we imply the preservation of the purchasing power of your money, that is, its protection against depreciation due to inflation and the accrual of interest on it. Even if inflation is about 4%, we will still have inflation. For savings not to lose their purchasing power, for people to have the opportunity to really save their money and preserve its purchasing power, someone should accrue interest on savings, and this is only possible with non-cash rubles.

This is true, technically, you can now make cash holdings as well, but I believe that cash is not a store of value as no interest is accrued either. Inflation depreciates cash holdings, decreasing the purchasing power of the money. I would like to stress once again that, although it is possible to make holdings in digital rubles, they are certainly not a store of value.

As to your second question, the purchasing power still depends on inflation, the amount of money you will need to purchase a certain quantity of goods and services, rather than a certain amount of US dollars, that is, the purchasing power depends on inflation rather than the exchange rate. This is essential for people in the first place. We are seeking to decrease inflation and preserve the purchasing power of money. This is what price stability is about. It helps protect Russians’ funds against depreciation.

For savings to preserve their purchasing power over time, one can deposit them with a bank. The interest offered by banks — for instance, today it is 6–7% — that will be accrued on a depositor’s account after a certain period when the deposit matures will offset the overall price growth over this time. In other words, the purchasing power of the money saved in such a form will be preserved.

As regards your third question, indeed, we are now actively switching to settlements in national currencies, multiple national currencies. However, this process varies as some national currencies have certain restrictions, including FX restrictions.

Indeed, it is quite difficult for Russian exporters to repatriate Indian rupees, withdraw them abroad, that is, there should be demand for these rupees from importers who should switch to the import of goods purchased from India in rupees, or they need to invest in some rupee-denominated financial assets. We are aware of these problems and, of course, are discussing them.

As to financial instruments denominated in rupees that will be available in the Russian market, this is hardly probable in the near future due to FX restrictions existing in India.

QUESTION from Vedomosti:

How large is the outflow of capital caused by foreign companies’ exit from the Russian market, according to the Bank of Russia’s assessment? This is my first question.

I’ve got another question about digital financial assets (DFAs). Recently, Norilsk Nickel launched a remuneration programme for its employees and is now issuing DFAs tied to its shares. However, as we know, public companies are not allowed to place DFAs according to law, due to which they do this tying DFAs not to shares but to their price. What is the Bank of Russia’s opinion about this practice? Would not this kind of discourage Russian investors from the DFA market that has just begun to develop as they purchase DFAs seemingly tied to shares but, actually, do not become their holders?


As to the outflow of capital abroad, it would probably be hard to speak of a separate category of the transactions for the sale of non-residents’ assets and the withdrawal of these funds. Statistics do not provide such figures, but generally they have an effect on the balance of payments.

Mr Zabotkin, do you know any particular figures?


Speaking of the previous year and the figures disclosed in our annual report and in the course of the discussion at the State Duma in this regard, the reduction in the equity share, including both direct and portfolio investment, approximated $35 billion as of the end of last year. However, this is not related solely to the exit of foreign companies — this is a broader category of investment.


As to DFAs, I would not comment on any particular instruments, but it is definitely important for us to protect the rights of investors in DFAs. Investors need to be aware of the risks inherent in these assets and know what they can receive as a result. This is true of any investment in the securities market regardless of whether this investment is in the conventional or digital form, and we will be closely monitoring this issue.

QUESTION from the blog Anna_finance:

My question is rather about the basics of financial literacy and personal finance. It would be great if cold calls promoting loans were prohibited. Indeed, financially literate persons choose loans and credit terms comprehending the reasons why they are raising a loan. Most probably, cold calls saying that any person is likely to need funds for the coming vacation make people raise loans emotionally without understanding clearly what they are doing. Accordingly, these are ‘bad’ loans on ‘bad’ terms that are expensive for people. As such aggressive advertising is permitted, these allegedly affordable but actually expensive loans do not help people as an instrument, but, to the contrary, negatively affect those people who are not financially literate enough.

Does the Bank of Russia have any plan to control this situation somehow? For instance, a number of countries really have the practice of penalising those companies that are aggressively advertising their services. However, as an economist, I can also see a certain conflict of interest in this regard as the Central Bank should support the banking system and, accordingly, loan advertising supports commercial banks. What is more important in this situation: supporting banks or ordinary people who are not financially savvy?


Thank you very much for your question — it is really vital. I would like to say that we do not see any conflict of interest in this area. The protection of consumers’ rights in financial markets is what matters most to us. Of course, any financial institutions shall be stable, but the purpose of their existence is to provide financial services.

We have been always combating the practice when some financial institutions facing certain difficulties are trying to settle them by using various fraudulent schemes. Previously, that was money laundering through various illegal operations — the problem that we have almost coped with. Recently, we have been frequently observing such schemes where people are simply deceived, this is hard selling of products or misselling.

The aggressive advertising that you are talking about has really become a huge problem for people. This is a problem when people emotionally raise a loan they do not actually need. Even if they refuse, such endless calls are simply irritating people.

The key for us is that any financial product (and we are currently promoting this topic) shall have user value, consumer value. Under no circumstances may financial institutions solicit people to buy a product that has no value for them.

As to advertising, this issue seems to be simple, but it is really hard to settle this problem as people often give their consent to calls, to ads by signing a long contract without even noticing that they have given such consent.

Therefore, the first thing that we are now going to do is to require financial institutions to prepare a separate document for giving such consent with a separate signature for people to notice this at least. This might also be a special form to be filled in on the website. Besides, there shall be an end date of such consent and it may not be extended automatically. If a certain period — which should probably be even specified as a recommendation — has expired, such consent shall become invalid.

If a person did not give consent but receives such calls, it is possible to complain to the Federal Antimonopoly Service, but this is only possible when this consent was not given. We will explore other options that might help address this situation.

QUESTION from Interfax:

I’ve got two questions. Has the Central Bank estimated the amount of funds due from banks to the budget as a one-time payment — windfall tax? Will the current version of the draft law take into account the Bank of Russia’s view that this tax shall be paid only by the banks that are not using the regulatory easing granted by the Bank of Russia?

And another question, please. A part of the easing that the Central Bank granted to banks last year will expire at the end of June, for instance, in relation to provisions for corporate loans. The Bank of Russia stated that it was going to modify a part of these easing measures and to keep the others on a permanent basis. Could you please provide details about the measures to be modified and the measures to be kept in the regulation on a permanent basis?


As regards the one-time payment, my colleagues in the Bank of Russia assessed this for every bank that might potentially be required to make such a payment. This does not have any major effect on financial performance, there is no impact on financial stability, but I would not be able to specify an overall figure at the moment.

Speaking of the possibility of paying these taxes only by those banks that are not using the regulatory easing, profit for 2021–2022 shall in any case be calculated without taking into account this regulatory easing. This is rather about the calculation base. Therefore, we hold that this shall not be calculated based on the profit earned using the regulatory easing.

As to the future of the regulatory easing, we are currently discussing this issue. When we make relevant decisions, we will as usually provide comprehensive information about the measures to be kept, modified or terminated.

QUESTION from Fomag.ru:

I’ve got two short questions. The first one is about M2. Some experts believe that the growth of M2 is a significant proinflationary factor, whereas others object arguing that this is a certain technical indicator that in this case should not be considered now in this context. What is your opinion about this? This is my first question.

My second question is about the market of Eurobonds. Many Russian companies had been raising debt financing for many years in western countries, but now this market is closed for them. Are these companies experiencing any problems with financing in such a situation? Will the domestic market be able to cope with the task of their financing? What are the mechanisms that might be used for this in addition to substitute bonds? Are there any other options to support domestic companies?


Indeed, you have mentioned substitute bonds because such substitution of external financing for domestic borrowings is already progressing actively and substitute bonds are one of the instruments. We believe that the Russian bond market will be able to continue to adequately substitute the lost external financing. For example, the funds payable on Eurobonds by Russian companies this year, probably, total slightly more than $7 billion. However, over 2022 in general, the entire market of corporate bonds in Russia expanded by a third, namely from ₽10 trillion to ₽13.3 trillion. In other words, this amount of $7 billion is about 20% of last year’s growth of the market, that is, the domestic market is totally capable of substituting this amount.

Of course, we all need to take efforts to make such corporate bonds more attractive for investors. To do this, we need to disclose information and improve corporate governance practices. These are essential elements to increase investor appetite for Russian securities.

Speaking of M2, we are certainly analysing the monetary aggregates, and not only them. Last year, we were largely focusing on the M2X aggregate which is broad money also comprising the foreign currency component. It is essential exactly because of this active substitution that you’ve mentioned, the substitution of foreign currency financing for ruble borrowings, the conversion of foreign currency deposits in the banking system into ruble deposits, which caused a rapid increase in M2. However, we expect that this process will be ending nonetheless and the growth rates of M2 and M2X will be converging. As to the forecast difference between M2 and M2X, this is about 2–3 percentage points, right?




Nevertheless, we certainly consider money supply with regard to how it influences demand in the economy and inflation. Would you like to add anything, Mr Zabotkin?


A key aspect to emphasise is that last year’s growth rate of money supply was really at its multi-year highs. As to M2, everything has already been said. However, even for the M2X aggregate, the annual growth of 14–15% is a high rate if we track the statistics beginning from 2014–2015. Among other factors, this was associated with the lengthening of payment chains that required larger amounts of money to service economic activity. Besides, a part of the funds that were previously supplied to the Russian economy by the foreign banking system have been relocated and are now part of Russia’s money supply. A part of this process is the substitution of foreign borrowings for domestic ones, which you’ve mentioned in your second question.

Nevertheless, this process will also end. Probably, for inflation to be steadily about 4%, the growth rates of money supply should be slightly lower than those recorded last year.

QUESTION from Bloomberg:

The Bank of Russia’s field institutions are becoming increasingly more important in connection with the special military operation. How is the Central Bank developing its system of field institutions? Is it increasing their number, hiring more employees, purchasing anything for them, or implementing IT solutions?


The only thing I can say is that the field institutions are performing their functions in accordance with the relevant laws.

QUESTION from Kommersant:

In its statement, the Board of Directors says how it will supposedly respond to an expansion of the budget deficit this year. How will the forecast change, in your opinion, if the budget deficit as of the end of the year, to the contrary, turns out to be smaller rather than larger than the target?


This will apparently be a disinflationary factor.


This will depend on the factors due to which this deficit will be smaller. First of all, the fluctuations of the deficit associated with the fluctuations of oil and gas revenues do not impact the dynamics of aggregate demand as they are fully offset by fiscal rule-based operations. However, even with regard to the non-oil and gas deficit, it is actually important how this deficit is covered and so on.

Therefore, it would be hard to give a simple direct correlation. However, it is possible to assume, as Ms Nabiullina has already said, that a reduction in the structural deficit is certainly a factor that is decreasing aggregate demand compared to the alternative baseline scenario and, accordingly, all else being equal, suggests a more accommodative monetary policy than in the case of a larger structural deficit.

QUESTION from the news agency UralBusinessConsulting (Yekaterinburg):

During 2022 and in early 2023, the Government made rather large financial injections into the Russian economy, including both social payments and allocations to enterprises to help them address import substitution issues. Nonetheless, this has not provoked price growth.

Besides, consumer activity remains moderate. In these conditions, don’t you consider returning to the idea of helicopter money in order to boost consumer activity?


I would start from the end, from helicopter money. As you remember, we do not support the idea of helicopter money. We believe that financial aid should be targeted to support the most vulnerable social groups during periods when incomes plummet. You know that some countries were using something similar to helicopter money in order to revive demand, for instance, during the pandemic. However, after the end of the lockdowns, these countries had to face a large surplus of pent-up demand, a large surplus of savings. Supply-side restrictions prevented them from manufacturing sufficient quantities of goods. As a result, inflation in these countries hit its 40-year highs and, ultimately, that money did not help people. Hence, our position on this issue remains the same.

As regards consumer activity, indeed, consumer demand was subdued largely because of uncertainty. The saving ratio was high, but is now going down already, and consumer demand is reviving. An important indicator of this process is the rebound in retail lending in March. Budget support last year was exactly to offset the decline in consumer demand. Consumer demand contracted, and budget expenditures helped offset that. Actually, such fiscal policy prevented a slump in aggregate demand and helped remove supply-side bottlenecks. As a result, current price growth at the beginning of this year was about 4% in annualised terms. However, as consumer confidence restores and consumer demand expands, as we are already observing in the statistics, this might increase inflationary pressure, if public demand remains the same. Our objective is to pursue monetary policy taking into account these factors so that the dynamics of aggregate demand, including fiscal, public, investment and consumer demand, are proportionate to the capacities of the economy, the capacities to ramp up the output of goods and services in order to ensure that inflation is at its target level.

Thank you for attention.

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