Russia’s central bank chief stands up to Kremlin rivals

► Bank governor helps steer country through deepest recession since 1990s

Putin’s spokesman, Dmitry Peskov, said in reply to Reuters questions that the central bank was independent, and the Kremlin never sought to influence it. One Thursday in March, Elvira Nabiullina, governor of Russia’s central bank, faced down a rival in the struggle for influence in President Vladimir Putin’s entourage.

At a meeting chaired by Pu- tin, Economy Minister Alexei Ulyukayev sought the president’s blessing for the central bank to give 140 billion rubles ($ 2.2 billion) to lenders, according to a person who was briefed on the meeting by Nabiullina.

Banks would use the extra money, Ulyukayev argued as he sat before Nabiullina in a Kremlin conference room, to lend to companies suffering amid Russia’s economic down- turn. Some of Putin’s friends in the business world would benefit too.

Nabiullina objected, saying that releasing money would drive up inflation and undermine her monetary policies.

Putin backed the central banker.

Nabiullina’s ability to hold the line reflects deep ideological rifts emerging at the Kremlin amid an economic down- turn caused by falling oil prices and Western sanctions.

Putin’s inner circle is dividing into two broad camps: On one side are associates – many of whom have security backgrounds like Putin.

On the other side are Nabiullina and her allies who believe in economic openness.

Over the past two years, the 52- year- old central banker has steered Russia through one of the deepest recessions since the end of Communism.

Nabiullina’s policy of letting the ruble fall pushed up the cost of imports, which in Russia include many basic goods. That drove consumer price inflation last year to 12.9 percent. For most people, wages have not risen as fast, and in some cases have even fallen.