Ruble Cuts Both Ways
In the aftermath of the gruesome murder of Central Bank First Deputy Chairman Andrei Kozlov and his driver, this may not be the most appropriate moment to debate the Central Bank's conduct of monetary policy. But calls for the Central Bank to allow nominal ruble appreciation to fight inflation from many corners (notably some investment bankers) are heard fairly regularly. Such a stance tends to simplify the dilemma faced by the Central Bank, which has, in fact, done an admirable job in walking the policy tightrope between allowing gradual ruble appreciation and taming inflation.
In the aftermath of the gruesome murder of Central Bank First Deputy Chairman Andrei Kozlov and his driver, this may not be the most appropriate moment to debate the Central Bank's conduct of monetary policy. But calls for the Central Bank to allow nominal ruble appreciation to fight inflation from many corners (notably some investment bankers) are heard fairly regularly. Such a stance tends to simplify the dilemma faced by the Central Bank, which has, in fact, done an admirable job in walking the policy tightrope between allowing gradual ruble appreciation and taming inflation.
In sum, these critics argue that the bank should forget about protecting industry (leave that to the government, as The Moscow Times argued in a Sept. 7 editorial) and let the ruble appreciate in nominal terms. In so doing, less of the current account surplus will be monetized and the inflation rate will fall. The implication ...
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