Central Bank Discusses Bank Liquidity Norms

Elvira Nabiullina, head of the Central Bank, stated at the Alfa Summit that accusations of the regulator intentionally harming the economy through high interest rates are unfounded. The remarks come as small businesses report profit losses. The source noted that while money is available, businesses are struggling with the current economic environment. Central Bank Governor Elvira Nabiullina stated the bank has no choice but to maintain high interest rates due to economic overheating. Macroeconomic data indicates demand significantly exceeds supply, which threatens high inflation. While some individual companies may not feel the overheating, the central bank is prioritizing macroeconomic stability. Elvira Nabiulina stated the slowdown is a forced measure due to high inflation rather than a special initiative. She noted there is no choice between high inflation and high growth. The regulator's decisions regarding the key interest rate will not be automatic and require careful analysis. The discussion follows a rise in yuan-denominated repo rates in March. Banks reportedly issued yuan loans using unstable funding sources, leading to sharp rate increases when clients withdrew funds. The central bank has previously discussed introducing specific targets.