Kremlin audit targets central bank amid inflation blame game
The tension between the head of the Russian central bank, Elvira Nabiullina, and the Kremlin, fueled by high interest rates, has led to an audit of the institution. The Kremlin has attempted to blame rising inflation on the central bank, according to the American think tank Institute for the Study of War (ISW), although these claims are based on unconfirmed reports.
The goal of the auditing institution, the Chamber of Accounts, is to investigate the monetary policy conducted by the central bank from 2022 to 2024, and assess the impact of the interest rate on inflation, budgetary expenditures, and investments.
An unconfirmed source cited by the ISW suggested that the audit is an attack on Nabiullina. This initiative appears to be driven by a group of lobbyists from large Russian firms aiming to lower interest rates.
Inflation is rising due to Russian aggression in Ukraine. In December of last year, the central bank maintained the benchmark interest rate at 21 percent. High interest rates are restraining the growth of inflation. In recent months, the Kremlin claimed that inflation was at 9-10 percent, but the ISW reported that it was likely closer to a range of 20-25 percent.
According to analysts, the Kremlin likely pressured the central bank to keep the interest rate unchanged, despite indications that it should have been raised.
Is the Kremlin looking for a scapegoat?
The ISW noted that the Kremlin attempted to shift the blame for rising inflation to the central bank, particularly its head. This move was likely intended to divert the anger of Russian businesses away from Vladimir Putin and toward Nabiullina, who, however, is believed to have limited autonomy in conducting monetary policy.
The audit may be part of continued pressure on the bank to prevent further interest rate hikes. This would manage the expectations and frustrations of Russian businessmen and support the Kremlin's narrative regarding the economic stability of Russia, according to the ISW.
