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Only One Price Matters in Russia

External communications from Russia's central bank are focusing on inflation, but the central bank's actions increasingly suggest all that matters in rate-setting is the price of oil.

By Agnes Lovasz, Bloomberg | Updated on February 18, 2015

At central banks from Canada to New Zealand, prices of a wide basket of goods help determine the direction of interest rates. For Russia, increasingly, only one price matters: oil’s.

Energy exports, already the lifeblood of the nation’s economy, may now be dictating monetary policy. The head of Russia’s central bank, Elvira Nabiullina says she checks the price of oil several times a day. Last year’s 46 percent plunge in crude prices is making it tougher for Russia to fulfill a plan to gradually introduce an inflation-targeting strategy this year with the aim of reducing price increases to 4 percent by 2017. 

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