Nabiullina spoke in Russian. The quotes below were translated into English by Reuters.NABIULLINA ON THE RATE DECISION”We considered three options today: to raise the rate to 20%, to 21% and above 21%. The option of holding the rate was not considered, no one suggested it, but we discussed the options of raising the rate to 20% and 21%.”The possibility of raising the rate with the same steps in the next (meeting) will depend on the data that we’ll receive: data on the development of the economy, inflation, inflation expectations, the rate of credit growth in general, but we allow for the possibility of an additional rate increase in December.”NABIULLINA ON THE MAIN PRO-INFLATIONARY FACTORS”The main factor is that we will continue to have an imbalance of supply and demand. This may be factors related to the budget, we always say that budget changes are an important factor that we take into account. It will also depend on the rate at which loans will grow, and loans in general…. An important factor is inflation expectations, which, unfortunately, are still high and have even increased.”NABIULLINA ON THE WEAKENING OF THE EXCHANGE RATE”We also take this into account, indeed, over the last few months there has been some weakening…we do not change the assessment of the carry-over effect – a 10% change in the exchange rate is about 0.5 times the carry-over into inflation.””But if we look at longer trends in the exchange rate, we have the exchange rate at about the same level as it was a year ago. But it has been volatile during the course of the year, and we take all this into account.”NABIULLINA ON THE INFLATIONARY TARGET”By the end of the year, current price growth will be near 4%…we will reach the target in 2026, in the first half of 2026.”NABIULLINA ON THE DANGERS OF SHOCK RATE INCREASES”We can’t push the rate higher now in order to bring it back to the target even faster…Yes, we can achieve a halt in inflation and even provoke deflation with a prohibitive level of the rate. But the result will not be a return of the economy to sustainable, balanced growth, but an excessive cooling of demand with excessive volatility in all parameters, in interest rates, in production, in employment, and a strong deviation of inflation downward from the target.”And such excessive volatility will have negative consequences for economic development, so we have no need for this kind of shock increase.”*NABIULLINA ON THE TIMING OF A RATE CUT”When inflation starts to fall steadily, and we see it falling in line with our forecast, this may indeed be a signal for the start of a rate cut. When that will happen, we can’t say right now.”*NABIULLINA ON THE INFLUENCE OF GOVERNMENT PROCUREMENT AND CORPORATE LENDING”We have seen that mortgage issuance in recent times was mainly under preferential programs – this has had a serious impact. I am referring to non-recourse concessionary mortgages. For corporate loans, the concessionary programs themselves are much smaller.””But the company’s inclination, let’s say, the company’s appetite to take loans depends not only on incentives, subsidies, interest rates, but also on government contracts, i.e. when there are government contracts that are not short, but long, companies are certainly more willing to take loans at high rates, but it is probably impossible to quantify this share.”*ZABOTKIN ON CORPORATE CREDIT”What’s important to realize is that it doesn’t matter whether corporate credit is growing in the purely market part of the economy or because companies are borrowing in order to operate to meet government demand. It’s the overall level of demand in the economy to which they are responding that matters.” More
