State Duma deputy and chairman of the Committee on Economic Policy and Entrepreneurship, Yevgeniy Fedorov, has called for a criminal investigation of the Russian Central Bank, according to a report by NewsRu.
“We have sent a request to initiate criminal proceedings against the Central Bank. The Prosecutor’s General Office replied that it is working on it, and that they have started a preliminary examination of the actions of the Central Bank,” he said on the radio station “Русская служба новостей”.
“The Central Bank — it is the institutional enemy of the country… I assume that it will do the maximum harm. The Central Bank will do everything to make the ruble fall and the interest rates rise,” he added.
He accused the Central Bank of violating the 75th article of the Russian Constitution, which states that its primary function is the protection and stability of the ruble, reports “Русская служба новостей”.
Growth in the Russian economy has disappeared as the country has come under the pressure of economic sanctions, falling oil revenue, and a tanking ruble.
However, unlike many western central banks like the Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan, Russia central bank has kept monetary policy tight despite calls for more dovishness.
In fact Russia’s central bank has actually been raising rates. On October 31, it hiked its benchmark rate to 9.5% from 8.0%.
“Those who follow the central bank say the hawkish moves are a result of Putin, known for closely managing Russia’s machinery of power, giving the bank’s technocrats free rein,” Reuters’ Lidia Kelly and Oksana Kobzeva reported.
On Monday, the ruble crashed to an all-time low, down as much as 8% earlier on in the day (before seeing a slight rebound.) And on Tuesday, the exchange rate got up as high as 53.97 rubles to 1 dollar.
Additionally, on Tuesday, Russia’s Economy Ministry downgraded its GDP forecast for the country in 2015 from 1.2% growth to a 0.8% contraction — meaning that the country has started falling into a recession.
“Recession in Russia is now a certainty,” writes Frances Coppola. “The only question is how deep and prolonged it will be, and that depends on two things — the behaviour of the oil price, and the effectiveness of Western sanctions. And, of course, how Russian politicians react to both of these.”
Here’s a look at the ruble (orange) tanking against the dollar. It’s tracked the plunge in oil prices (green).