(Bloomberg) President Vladimir Putin proposed a third term for Bank of Russia Governor Elvira Nabiullina, indicating an attempt to keep economic policy in the hands of a trusted technocrat as the country faces the consequences of its invasion of Ukraine.
The Council of the Lower House of Parliament will consider the proposal for a new five-year term on March 21, according to a statement published Friday on the State Duma website. The council will set the schedule for a vote on his re-election, which is almost assured given Putin's support.
Nabiullina has led the Bank of Russia through multiple crises since 2013, gaining worldwide recognition as a harsh-toned governor focused on combating inflation even at the expense of economic growth. She maintained her independence despite occasional criticism from Putin as she sought to boost growth.
However, Putin's invasion of Ukraine triggered harsh sanctions that showed that his efforts to build a “Russian fortress” isolated from Western influence fell short. Instantly, nearly half of the central bank's $640 billion in foreign reserves were frozen, pushing Russia to the brink of its first foreign default in more than a century.
“That's great news,” said Natalia Orlova, chief economist at Alfa-Bank. “His third term gives hope that the inflation targeting structure will not be completely destroyed.”
Near the start of his first term, he oversaw the free floating of the ruble after falling oil prices and sanctions aimed at punishing Putin for annexing Crimea caused the value of the ruble to fall by 50% in 2014.
However, the economic crisis caused by the war in Ukraine forced it to adopt currency controls when the Russians rushed to switch their savings into rubles when their country became the most sanctioned nation in the world.
The central bank kept interest rates at 20% after more than doubling them at an unscheduled meeting following the Russian invasion.
“Nabiullina has a very good reputation among investors and his re-election under normal circumstances would be positive, but in the current hostile environment he is unlikely to make a significant difference to Russian assets as long as the military conflict in Ukraine continues,” said Piotr Matys, senior currency strategist at InTouch Capital Markets Ltd. in London.
Original Note:
Putin Backs Nabiullina for New Term as War Roils Russian Economy
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