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

investing.com:

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.

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