Russia rules out joining the QE gang

The Russian central bank has ruled out joining its global counterparts with a massive bond-buying despite the country sliding into a recession this year.

Speaking at a banking conference in Moscow, Russian Central Bank Chair Elvira Nabiullina said that a quantitative easing (QE) package wouldn't be applicable for the country and would increase inflation and heighten capital outflows, according to the Dow Jones news agency.

The country is due to post negative gross domestic product (GDP) growth of around 4 percent in the coming year. Russia has been hit hard by the dramatic fall in oil prices and international economic sanctions following its intervention last year in Ukraine. The Russian ruble has experienced a major selloff due to the economic concerns and was one of the worst-performing currencies of 2014 despite emergency measures by the country's central bank.

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The bank has produced several rate cuts this year and has also performed market interventions by selling its U.S. dollar reserves in the hope of boosting the price of the ruble against the greenback.

Russian Central Bank Governor Elvira Nabiullina
Sasha Mordovets | Getty Images
Russian Central Bank Governor Elvira Nabiullina

Nabiullina said Tuesday that she expected a rapid decline in inflation for Russia, if there are no unforeseen shocks, after a weak ruble caused consumer price growth to soar to around 16 percent in recent months.

She also said that the banking sector was strong enough to weather financial difficulties, according to Reuters, and said the bank was ready to continue cutting interest rates as inflation rates fell.

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"On the whole, we judge the situation in the banking sector as stable," she said, according to the news agency.

"The banking sector maintains a substantial capital buffer and the banking sector is able to counter serious shocks even if crisis phenomena deepen."

The ruble has actually appreciated this year against the greenback and was higher for the session after Nabiullina's remarks, close to a 2105 high. Higher oil prices have been seen as the main driver for Russian assets, which have staged a small rebound in recent weeks. Russia's five-year credit default swaps - the price it costs to insure its debt over a 5-year period - have fallen to multi-month lows in recent sessions and Sberbank - one of its biggest lenders - has recently posted better-than-expected results.