There is tension between the head of the Russian Central Bank, Elvira Nabiullina, and the Kremlin over Russia's high interest rate and wartime monetary policy.
This is stated in the daily analysis of the Institute for the Study of War (ISW).
A Russian insider claimed on March 23 that the Accounts Chamber of the Federation Council of the Russian Federation, which is the supreme audit body of the Russian Federation, recently began an audit of the Russian Central Bank to examine its monetary policy from 2022 to 2024 and the impact of the interest rate on inflation, budget spending and investment.
The source claims that the investigation is "in effect" an attack on Nabiullina. The insider claims that a group of lobbyists from major Russian businesses are pushing for a rate cut.
ISW cannot independently verify this insider’s claim and has not seen any other reports of the alleged check.
Inflation in Russia is rising due to Russia’s full-scale war in Ukraine, and in December 2024, the Russian Central Bank decided to keep the key interest rate at 21% – the highest Russian interest rate since 2003 – as part of efforts to curb rising inflation rates.
Russian Central Bank interest rate through 2025 has remained relatively conservative despite significant and rising inflationary pressures.
In recent months, the Kremlin has claimed that the inflation rate is around 9-10%, but this figure is likely far below the actual inflation rate, which is probably closer to 20-25%.
The current interest rate in Russia should probably be higher, and the Kremlin has probably been pressuring the Central Bank to keep the rate at 21%, when the Central Bank should have raised it to contain inflation.
Russian President Vladimir Putin has also tried to shift the blame for rising inflation onto the Central Bank, and specifically onto Nabiullina.
This was likely an attempt to divert the anger of the Russian business community away from the Kremlin and towards it, even though Nabiullina was probably not in a position to exercise fully independent monetary policy. policy.
The Central Bank audit may be part of the Kremlin's ongoing efforts to exert political pressure on the bank to prevent further interest rate hikes above the current 21%, manage the expectations and disappointments of the Russian business community, and continue the Kremlin's narrative of Russia's economic stability.
The Kremlin's continued manipulation of Central Bank decisions is likely hampering the Russian government's ability to conduct sound wartime monetary policy.
Ukrainian forces recently advanced near Borova, and Russian forces recently advanced near Toretsk and Pokrovsk.