MOSCOW (Reuters) -Russian Central Bank Governor Elvira Nabiullina addressed a news conference on Friday after the central bank cut its interest rate by 50 basis points to 16.5%.
Nabiullina spoke in Russian. The quotes below were translated into English by Reuters.
ON THE OPTIONS FOR FRIDAY'S RATE DECISION
"Three options were considered in detail: 16%, 16.5%, and an unchanged rate of 17%.
"There were many arguments for these choices, but the differences in positions can probably be reduced to the assessment
of stable inflation and the degree of concern about the scale of possible secondary effects from one-off pro-inflationary factors."
ON THE IMPACT OF WESTERN SANCTIONS
"The sanctions are primarily aimed at restricting exports of our raw materials. It's difficult to predict the exact impact of these sanctions, but we view them as a negative external factor.
"Much will depend on how we adapt to these sanctions. We know from previous periods that it takes a certain amount of time, but adaptation did happen. Therefore, it isn't necessary yet to assess whether this will require any changes in monetary policy decisions. We will see how the situation develops."
ON FUTURE RATE DECISIONS
"I believe that we are in a cycle of monetary policy easing, either way. It may happen with pauses, but you can see the trajectory of the rate that we have set for next year, which is a continuation, albeit a more cautious one, of monetary policy easing... We see that demand growth is slowing down, demand overheating is subsiding, and we expect the demand gap to close in the first half of next year.
"Our forecast, if you look at the trajectory of the key rate, including for this year, suggests the possibility of both an additional reduction at the December (rate-setting) meeting and an unchanged rate."
ON THE LABOUR MARKET
"...tensions on the labour market are also easing slightly... We see that the number of vacancies is decreasing. The (labour market) survey shows that the share of companies experiencing a shortage of personnel is also decreasing. Although the number of these companies remains high, there is a certain trend towards a reduction in tension in the labour market."
* ON OIL PRICES
"The budget rule essentially neutralises the impact of these oil price fluctuations on our economy. It absorbs, if not all, then the lion's share of this volatility...(the mechanism) works as long as there are sufficient funds in the National Welfare Fund to neutralise this impact, to compensate for the loss of oil and gas revenues...And if the funds are exhausted, then the effectiveness of the budget rule as insurance against a temporary decline in prices will also be exhausted.
"Therefore, in this regard, we welcome the government's plan to gradually reduce the cut-off price, as this will help to protect the economy in the long term, to protect the economy and the budget more reliably from oil price fluctuations and from scenarios in which the long-term export price of oil may fall below $60 per barrel."
(Compiled by Lucy Papachristou; Editing by Mark Trevelyan/Andrew Osborn)
