Security for Nabiullina has been strengthened: why is she called Steel Elvira in the West?

The head of the Central Bank of the Russian Federation, Elvira Nabiullina, had to strengthen security after raising the key rate to a record 20 percent in February 2022. This is reported by The Economist, whose journalists spoke with one of the Central Bank employees.

It is also reported that Nabiullina spends a lot of time at work – a hairdressing salon, dressing room and dry cleaning were organized for her in the Central Bank building.

Another interlocutor of the newspaper spoke of Nabiullina’s “steel determination”. “She was known as Steel Elvira, and even strong men were afraid to enter her office,” said a former colleague from the Ministry of Economy.

In the USA, Nabiullina was called the link between the Russian Federation and the world economy

The authors of the article call Nabiullina a leader whose “mere presence at the helm may be enough to ‘calm’ the markets.” “After Western countries imposed a series of sanctions against Russia in 2014, it carried the ruble through the ensuing shock with minimal damage,” the material says.

The publication also provides the opinion of former adviser on Russia at the US National Security Council, Fiona Hill. She believes that Nabiullina can become a link between Russia and the world economy after the end of the conflict in Ukraine.

The rate was raised to record levels in February 2022

On February 28, 2022, the Bank of Russia raised the key rate from 9.5 to 20 percent, which became a historical maximum both in terms of the final figure and the rate of increase. Then the Central Bank explained this step by dramatic changes in external conditions for the Russian economy and considered that this could “maintain financial and price stability and protect citizens’ savings from depreciation.”

The rate lasted at this level for a month, after which it began to be reduced. By September 2022, it reached 7.5 percent and remained there until the summer of 2023. From July 2023, the key rate began to rise and by December reached 16 percent.

Since then, the regulator has kept it at this level. At the same time, in April Nabiullina did not rule out that the rate could be raised again. However, the Central Bank’s base scenario assumes a rate reduction from the second half of 2024.

In Russia, a new increase in the key rate was allowed

On May 31, it became known that at a meeting on June 7, the Central Bank could raise the key rate to 17 percent. At the same time, analysts interviewed by Izvestia allowed a further tightening of monetary policy (MP).

More than half of 21 experts suggest an increase in the key rate. Nine of them believe that the figure will remain at 16 percent. Rate reductions are not allowed, since since the last decision to regulate monetary policy, inflation in Russia has accelerated to 8.07 percent. As the head of the sales and customer support department at Alfa-Forex, Alexander Shneiderman, explained, the price increase in annual terms is almost twice as high as the target level of the Central Bank.

In addition to inflation, the reason for the rate increase is the high pace of corporate and consumer lending. Meanwhile, the cooling of the loan market was one of the conditions for easing monetary policy, which was called by the regulator.

In turn, First Deputy Chairman of the Board of VTB Dmitry Pyanov believes that in order to bring down inflation to the target 4-4.8 percent, it is necessary to increase the key rate to 17-18 percent. The double-digit indicator must be kept for at least three years – this will anchor inflation expectations and change the behavior of economic agents, the expert is convinced.