By Elena Fabrichnaya and Gleb Bryanski
MOSCOW (Reuters) -Russia’s Central Bank Governor Elvira Nabiullina won rare praise in parliament on Wednesday for shielding the economy from Western sanctions imposed in response to Moscow’s military operations in Ukraine, a sign she has cemented her position.
Nabiullina has faced criticism in recent months over her handling of the country’s battle with inflation, which led to the benchmark interest rate climbing to its highest level since the early years of President Vladimir Putin’s rule more than 20 years ago.
Much of the criticism has been voiced in parliament, with communist and nationalist deputies accusing her of acting on orders from the International Monetary Fund (IMF) to destroy the economy.
The attacks had fuelled rumours of her imminent removal as Putin considers replacing her with a more flexible technocrat.
But the tone in parliament on Wednesday was different.
“The leadership of the central bank, as well as the parliament’s banking committee, should be praised for doing everything in order to protect our country’s financial system,” influential Duma speaker Vyacheslav Volodin said.
He cited the creation of the national payment system, which kept transactions running when Visa and Mastercard pulled out of the country and many Russian banks were cut off from the SWIFT banking messaging system, as Nabiullina’s main achievement.
‘COUNTING ON DISORGANISATION’
In the early days of Russia’s operations in Ukraine, Nabiullina came under fire from war hawks who questioned her loyalty to Putin, while war critics likened her and her team members to Adolf Hitler’s war production minister, Albert Speer.
Speaking in the Duma, Nabiullina listed recent threats such as sanctions on Russia’s financial infrastructure introduced last year, including the Moscow Stock Exchange, which stopped trading in dollars and euros.
“They were counting on a serious disorganisation of our financial system but that did not happen. Trading partially shifted to a different format. The calculation of official exchange rates did not stop for a single day,” she said.
Nabiullina countered some of the criticism saying that despite high interest rates investment was at 20% of GDP in 2024, the highest level since mid-2000s, and has grown by one quarter in the last three years.
Nabiullina said Western sanctions had complicated cross-border payments but had no major impact on exports and imports as the regulators and businesses had developed alternative channels including cryptocurrency.
She defended high interest rates, saying her opponents’ warnings about mass bankruptcies, economic stagnation and recession had not materialised.
“The key interest rate protects the stability of the rouble through maintaining price stability, supports people’s real incomes and creates conditions for balanced economic growth,” she said.
Nabiullina said that amid a global trade war and market turbulence the central bank should make sure a slowdown in inflation is sustainable before embarking on a rate-cutting cycle.
“The tectonic changes in global trade are unfolding before our eyes, and it is still very difficult to judge where they will lead the global economy and how they will affect Russia,” she said.
(Editing by Gareth Jones and Hugh Lawson)
