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Putin projects economic calm after rouble slump, warns of inflation risks

Published Sep 12, 2023 03:37AM ET Updated Sep 12, 2023 08:26AM ET
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© Reuters. Russian President Vladimir Putin attends a meeting with representatives of business, officials and other participants of the 8th Eastern Economic Forum via a video link in Vladivostok, Russia, September 12, 2023. Sputnik/Mikhail Metzel/Pool via REUTERS
 
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VLADIVOSTOK, Russia (Reuters) -Russian President Vladimir Putin on Tuesday praised the central bank for keeping a lid on inflation with double-digit interest rates and said there were no insurmountable challenges when it came to limiting the rouble's volatility.

Putin used his speech at Russia's Eastern Economic Forum in Vladivostok to project a mood of financial calm, just weeks after the rouble's slump past 100 to the dollar led to Kremlin criticism of the bank's monetary policy and, ultimately, a 350-basis-point emergency rate hike to 12%.

Annual inflation quickened to 5.15% in August, above the 4% target, and most analysts polled by Reuters expect the Bank of Russia to raise rates again on Friday, as Moscow balances its desire for lower rates and quicker economic growth with the need to limit price rises.

Putin, whose economic aide Maxim Oreshkin appeared to have spurred the central bank into action last month, said the bank had reacted "correctly" and in a "timely manner" to the rouble's plunge and its impact on inflation.

Putin told the conference: "Yes, it reduces lending opportunities and slightly restrains the economy ... but it is a significant factor for inflation risks."

He added: "Of course, we need to influence this, but if we miss a situation that will lead to uncontrollable inflation growth, in the long run it will be even worse for the economy."

Putin said Russian authorities, who were discussing reintroducing some capital controls last month, had tools to keep the currency and markets under control, but promised there would be no sudden moves to limit rouble volatility for now.

"On the whole, I don't think there are any absolutely insurmountable problems or difficulties here," Putin said.

ROUBLE BOUNCES BACK

The rouble hit its strongest level in almost six weeks against the dollar on Tuesday, buoyed by a gradual increase in exporters' foreign currency sales and, according to some analysts, verbal interventions by the Kremlin, which said the rouble's worst days had now passed.

Putin said the "restrained" return of foreign currency earnings was among many factors pressuring the rouble, but urged businesses to continue investing in Russia, promising expanded trade links with eastern partners.

"They must understand that it is more reliable to work here, there is no need to step on the same rake," Putin said, using an idiomatic Russian phrase meaning to make the same, painful mistake repeatedly.

But he acknowledged that high inflation made it "practically impossible" to form business plans. Firms are also wary of the risks of foreign sanctions, asset seizures and a windfall profit tax that Moscow levied on some companies this year.

Putin said there was no need to raise more taxes for now, and, perhaps trying to allay businesses' concerns, categorically stated there would be no widespread reversal of past privatisations, after some lawsuits filed by Russia's general prosecutor's office targeted some Russian industrial assets.

"There will be no de-privatisation, I can tell you that for sure," Putin said.

Putin projects economic calm after rouble slump, warns of inflation risks
 

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Comments (9)
Alan Rice
Alan Rice Sep 12, 2023 2:28PM ET
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Kremlin: Loose lips, sink ....
Resident 1337
Resident 1337 Sep 12, 2023 10:44AM ET
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he's bullshitting again
Alex Doc
Alex Doc Sep 12, 2023 10:24AM ET
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As long as the trade balance does not improve for Russia, the RUB is not done dropping. It's as simple as that. Any foreign currency dumping will have only temporary effects, as we'll surely see in the next few weeks (especially if the crude price drops again)
gab nea
gab nea Sep 12, 2023 8:48AM ET
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like the orange criminal, Putin lies like a dog!
Maximus Maximus
Maximus Maximus Sep 12, 2023 6:07AM ET
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note to putler, easy fix, pull your soldiers out, and leave Ukraine in peace. thus, inflation will gradually come down to normal levels again...
Lars He
Lars He Sep 12, 2023 6:07AM ET
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Who is this Putler?
Maximus Maximus
Maximus Maximus Sep 12, 2023 6:07AM ET
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use ur imagination.. he's short, psychotic, and likes to invade his neighbours...
Resident 1337
Resident 1337 Sep 12, 2023 6:07AM ET
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Lars He  Hitler + Putin = Putler
John Laurens
John Laurens Sep 12, 2023 5:38AM ET
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Reuters sure does love themselves some Putin. Not shocking considering the ccp owns Reuters...well on paper they're Canadian, but we all know who Reuters carries the bucket for.. lmao
Tre Hsi
Tre Hsi Sep 12, 2023 5:38AM ET
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"Not shocking considering the ccp owns Reuters..."  -- you really need to avoid listening to those voices in your head
Lars He
Lars He Sep 12, 2023 5:38AM ET
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its. CPC, nothing else
Perroni Brignoli Francisco
Perroni Brignoli Francisco Sep 12, 2023 4:20AM ET
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Esse elemento ja era pra estar debaixo da terra a muito tempo.
oeg vokar
oeg vokar Sep 12, 2023 4:06AM ET
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It is extremely strange to be informed 1:1 about what Putin says and nothing about what Trump says. It will always be manipulated, cropped, misrepresented. Shame on you Reuters And please, it's time to take back your uneducated puppet Trudeau....Canada is now a third world country
Kingdavid Johnbull
Kingdavid Johnbull Sep 12, 2023 3:57AM ET
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Mr Putin you are afraid of inflation, yet you and the Saudi's enjoy tightening oil supply for higher crude prices which is one major cause of inflation globally
Lars He
Lars He Sep 12, 2023 3:57AM ET
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Believing inflation comes from price hikes is like believing heat waves is caused by your termometer rising.
 
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