The exchange rate is governed not only by oil – oil is an important factor, but not the only one to influence the exchange rate. The depreciation of the ruble was also largely triggered by typical seasonal variation in the current account – the current account usually shows stronger performance in the first quarter, irrespective of oil prices. The second factor is the growth in oil prices and oil sales by exporters. The third factor is important but the Central Bank believes that it should not be overestimated or exaggerated. I am referring to certain inflows of capital, which are comparable to the inflows of foreign capital to emerging markets. Further developments will depend on many factors: oil price movements, the Fed’s policy, strengthening or weakening of the exchange rate, and the strength of our economy. There are many forces at play here. QUESTION from TV channel Russia-24: Mrs Nabiullina, you have already mentioned that the Central Bank will support Russian stateowned banks affected by sanctions in relation to the situation in Ukraine. What specific measures are you going to take? Thank you. ELVIRA NABIULLINA: I would like to repeat and emphasise that we do not see any risk to financial stability of our credit institutions even if their investments in Ukrainian assets depreciate completely, because they account for only a very small share of their assets. Therefore we do not see any systemic risks here. Our banks have already created or are creating provisions for such assets.
This effect was expectable but proved to be stronger. The contribution of exchange rate fluctuations and heavy crop to inflation slowdown may decline in future. We took this into account when choosing the scale of key rate reduction. The Bank of Russia maintains a focus on the analysis of inflation trends in the regions. Although most regions are enjoying slower inflation, it still varies considerably. February data suggest that annual inflation in the regions ranged between 1.9 and 6.4%. Differing readings for price growth across regions are explained by a number of factors including households’ capacity to pay, the level of competition, industrial specialisation and the policy of local authorities. Monetary policy 1 / 14  BIS central bankers' speeches  checks overall inflationary pressure; yet, regional differences will persist, albeit, as we foresee, will diminish progressively. Inflation may also vary across households with different incomes. Early last year, these differences became stronger. This year we are witnessing lower inflation almost in all income groups, except for highest income households. Inflation in medium and low income households is approaching the 4% target, which is certainly a positive trend. This lays the groundwork for soundness of households’ savings and incomes. Second, a more sustainable economic recovery does not trigger inflationary pressure. The updated Rosstat data suggest that the downturn in the Russian economy was not so deep in 2015–2016 and the economy saw a recovery earlier than expected.