New Deputy Governor on monetary policy in CBR

RUSSIA ENERGY / FINANCE - In Brief 14 Jan 2015 by Marcel Salikhov

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Changes in CBR’s management were announced today at Gaidar Forum. There will be new Deputy Governor responsible for monetary policy. Dmitry Tulin will change Ksenia Yudaeva in that position. Mr Tulin worked in CBR in 1991-1994 and 2004-2006 (as Deputy Governor for banking supervision; he was one of the creators of Russian deposit insurance scheme). Since 2006 he worked for Deloitte in Moscow. Ms Yudaeva will keep her position as Deputy Governor but will focus on economic forecasting and financial stability issues. We see this as a welcome step in order to partially restore credibility of monetary authorities that was largely damaged in recent months by chaotic policy decisions. There were several obvious failures like insignificant key rate increase on December, 12 which was followed by 650 b.p. hike just four days after. While monetary policy decisions are set by CBR’s Board of the Governors so the Board overall is responsible for those failures Ms Yudaeva clearly showed lack of coherent communication skills with the markets. One cannot be sure in advance that Mr Tulin is a better fit for the job. But as experienced banker he probably has more chances ‘to talk’ to the markets. We do not expect changes in overall monetary policy stance with new Deputy Governor. Next meeting on monetary policy will be held on January, 30. We expect that disappointing CPI data and falling oil/RUB will force CBR to keep rates on hold or increase further.