Strange changes at the Central Bank
Forecast: “What's happening in Russia and around the world. An in-depth look at the present moment and a forecast for the near future” (published April 20, 2026, link)
S. Dragan:
Around May 6, 2026, unexpected changes will begin in Russia. This is a very strange and unexpected turn that could surprise and completely reverse all previous logic. Strange changes may also occur at the Central Bank.
From mid-May, unexpected changes have affected many areas of Russia's foreign and domestic policy, finance, economy, and other aspects of life.
Strange changes also occurred in the sphere of the Central Bank's activities and overall banking activities in our country.
The date of May 15, 2026, marked a turning point for Russian cardholders. This day saw significant changes come into effect, impacting nearly everyone who has ever withdrawn money from an ATM. The regulator and major banks are simultaneously tightening their stances on cash transactions. The goal is clear: combat fraud and "gray" schemes. But the cost is convenience and familiar limits for regular people.
Enshrouded in a degree of mystery and oddity was the situation with the Governor of the Central Bank of Russia during May-June. This naturally affected all areas of the financial institution's operations.
Elvira Sahipzadova is considered a veteran in power corridors: she has been at the head of the Bank of Russia for 13 years, and her career began even earlier - at the end of the 90s. For modern Russia, such political longevity is a rarity.
However, at the same time, Nabiyullina has long become one of the most criticized figures in the country. She was criticized under any circumstances: during periods of economic growth, crises, currency fluctuations, and after another hike in the key interest rate. Her opponents accused her of everything from "working in the interests of global elites" to intentionally stifling Russian industry with expensive loans.
Yet, the same thing always happened. A wave of outrage would rise, society would bubble, deputies would threaten to "get to the bottom of it," patriotic economists would demand radical measures - and then E. Nabiyullina would calmly continue her course. Her position seemed absolutely unshaken. And so it was until recently.
Like a bolt from the blue came the news that E. Nabiyullina missed the PMEF, which took place in Saint Petersburg from June 3 to 6, 2026. The absence of the Central Bank's head could not fail to raise eyebrows, as who else but her should have been present at the year's main economic event. Over the past ten years, E. Nabiyullina has only missed the PMEF in 2020, when the forum was not held due to the pandemic.
However, even more suspicions were raised by information that the head of the CBB missed a second significant event, namely the conference of the National Association of Stock Market Participants (NAUFOR) on June 9, 2026.
The term of office of E. Nabullina as head of the CBB expires at the beginning of summer 2027. This will mark the end of her third term in office, which began in 2022. According to the current legislation, no single person can hold the position of CBB chairman for more than three consecutive terms.
Given Nabullina's absence at both the PMEF and the NAUFOR conference, many experts began to consider the early replacement of the head of the CBB of the Russian Federation.
At the St. Petersburg Forum, the atmosphere around the monetary policy of the CBB was far from festive. Behind the beautiful stands, lively presentations, and grand speeches, there was a palpable tension. Representatives of the real sector of the economy almost simultaneously complained about the cost of money. The high key rate became a real stranglehold for industry, investment, and domestic demand.
In the corridors, no one really cares about their choice of words anymore. Accusations fly that the Central Bank is so focused on fighting inflation that it is, in essence, killing the already struggling economy.
Several independent experts claim that E. Nabiullina finds herself in a position known in chess as zugzwang, where any move by the player only makes their situation worse. If the head of the Central Bank gives in to pressure and cuts the key interest rate, currently at 14.5% annually, and lowers it below two-digit values, as her opponents demand, inflation will skyrocket. Yes, in the long term, this could revive the economy, but in the immediate moment, it will bankrupt millions of Russian households that are already on the brink of poverty. And then social explosion might not be far behind.
On the other hand, keeping the key rate high means finally depriving businesses and people of cheap loans, driving investments to zero, and ultimately crushing the already low consumer demand.
It is noted that the absence of E. Nabiyullina at PMEF and NAUFORA was preceded by a Bloomberg publication, which claimed that representatives of the Russian Central Bank allegedly tried to convince the president to cut defense spending amid a rapidly growing budget deficit, which has already reached 6.1 trillion rubles in the first five months and could reach two-digit values by the end of the year if the trend continues.
However, the proposal to reduce funding in the current conditions was perceived as a challenge to the established course. In fact, the Central Bank ventured into territory it should not have entered.
According to insider information, the proposal to "cut the appetites of the defense industry" was met with extreme coldness by the president. It is claimed that Vladimir Putin categorically rejected this idea.
There is another view regarding the "anomalies" of the Central Bank. M. Khazin argues that the Kremlin decided to convene a meeting to discuss Russia's monetary policy due to the complexity of the situation. Among those invited to the meeting were people who are usually not called. This concerns the team linked to the Gaidar-Chubais group, oriented towards the IMF:
"And E. Nabiyullina realized that she could in no way attend this meeting, and for this reason she decided to ignore it." The argument was a sick leave. How true this is, no one claims.
Meanwhile, as the economist says, the Kremlin apparatus clearly decided that such disobedience is an overreach and started to apply pressure. They spread a rumor that the head of the Central Bank had her FSO protection withdrawn, although it is unclear if she even had such a high level of protection. According to M. Khazin, this rumor itself is typical of what the Kremlin tower usually does when it tries to express its dissatisfaction:
"This pressure is like something they have ingrained, that those who commit apparatus violations must be punished. Like, you should have been there."
Formally, the Central Bank made concessions, albeit very minor ones. On June 19, the Bank of Russia lowered the key rate from 14.5% to 14.25% annually. The regulator chose the cautious option: it continued the cycle of easing monetary policy but did not take a more significant step that some market participants, businesses, banks, and even the President had expected.
Putin urged the Central Bank to lower the key rate.
The anticipation of the Central Bank's decision has become the main economic intrigue amid signals from President Vladimir Putin about the need to lower the cost of loans as inflation slows. At a meeting with the government on June 10, 2026, Putin stated: "Inflation is falling. How low is it? A little below five percent. Therefore, I think we can expect both a decrease in the key rate and the achievement of other necessary parameters." The president essentially indicated that the achieved slowdown in price growth should also be reflected in the regulator's policy.
Putin has already expressed skepticism about the rate. At the Congress of the Union of Machine Builders on May 14, 2026, the president stated that he would not "speak sadly about the rate." The Kremlin's position is clear: high borrowing costs suppress investments, demand, and production expansion. Banks and businesses have long argued that the key rate needs to be lowered more aggressively to maintain economic growth.
As noted earlier, the regulator, at the conclusion of the Board of Directors meeting in June, cut the key rate - for the ninth consecutive time - but this time by only 0.25 percentage points, to 14.25% annually. Central Bank Governor Elvira Nabiyullina, however, did not rule out a pause in the process of easing monetary policy.
Later, the regulator did not rule out a steeper trajectory for the key rate than expected in the April forecast, to stabilize inflation in the medium term. The Bank of Russia's forecast assumes an average rate for this year in the range of 14-14.5%, 8-10% next year, and 7.5-8.5% in 2028. The Central Bank maintained its inflation forecast for this year at 4.5-5.5%.
Following the Central Bank's decision, the Ministry of Economic Development saw potential for a further cut in the key rate, while VTB's First Deputy Chairman Dmitry Pyanov suggested that the rate would continue to decline this year in "homeopathic" steps, reaching 13.5%.
On July 1, 2026, at the Financial Congress of the Central Bank, E. Nabiyullina responded to the proposal by Sberbank CEO Hermann Gref to immediately reduce the key rate to a level of 10%, stating that such experiments are dangerous for the country's economy. According to her, a sharp reduction in the key rate may lead to accelerated inflation and the risk of stagflation.
«We are not fans of high rates. Credit availability should be, and there should also be fair conditions for competition, but this is not a question of the key rate - it is a question of inflation,»
There is space to lower the key rate in July. The timing and pace will depend on the situation. This was stated by the Governor of the Central Bank of Russia, Elvira Nabiyulina, in an interview with Nail Asker-Zade on July 2, 2026, according to the IS 'Vesti'.
“In July, we will update our forecast for the development of the situation, taking into account the existing factors. Basically, there is indeed space for rate cuts. However, the timing and pace of these cuts will depend on how the situation unfolds,” the Central Bank chief said.
Elvira Nabiyulina also noted, considering new factors, that secondary effects from the fuel market situation may impact the Central Bank of Russia's decision on the key rate.
The Governor of the Central Bank, Elvira Naberevna, stated the regulator's readiness to utilize all available legal mechanisms to protect Russia's interests regarding frozen assets. She made the corresponding declaration on July 2, 2026, at a briefing during the Financial Congress held in the Northern Capital. She emphasized that the Central Bank is not disclosing its future tactics. "The only thing I can confirm is that we are prepared to use all opportunities, all mechanisms, all rights to defend our legitimate interests," she said in response to a question about the evolving situation surrounding a lawsuit against the Belgian depositary Euroclear.
Russia is seemingly transitioning to new tracks, both internally in politics and externally in politics.
