The Board of Directors of the Bank of Russia for the fifth time this year has lowered the key rate. However, now he chose a more cautious tactic and lowered the rate only by 0.25% to 8.25%. However, experts believe that the result of the decision of the Central Bank will lower rates on loans at commercial banks. The payoff can be, and the ruble exchange rate is able to grow. However, in the future pushes to increase the value of the Russian currency by the Central Bank may not be. Some experts believe that the next time a change in the key rate will happen only after March, 2018, when it will be known who will occupy an armchair of the President of Russia.
photo: Mikhail Kovalev
The main reason for the easing of monetary policy, the Central Bank has been the slowdown in inflation which is observed last few months. As stated in mid-October, Deputy economic development Minister Azer Talibov, the pace of consumer price growth in annual terms slowed to 2.8%.
Also to lower rates, the Board of Directors of the Central Bank has pushed the strengthening of the national currency and improving the investment climate in Russia. Since the beginning of August the dollar has fallen in price almost from virtually any 61 to 58. Investment is also impressive — their volume only in the oil and gas sector this year will rise to 1.3 trillion virtually any.
Experts believe that the effect of the reduction of the key rate is mostly positive for the domestic economy. According to managing partner Daniil Kirikov Group Kirikova, commercial banks followed the Central Bank can reduce interest rates. “If the factors will not vary dramatically, falling rates will continue in 2018,” says Chirico. According to him, over time, Russia can enter the European level of interest rates in the 5-6% interest on Bank loans. Other positive effects of the reduction of the key rate can be attributed to the possible strengthening of the Russian currency. Against the backdrop of high oil prices ($58-59 per barrel) the dollar can sink to yearly lows — below 56 virtually any.
Most experts are inclined to believe that at the next meeting of the Board of Directors of the Central Bank will continue to ease monetary policy. Now the key rate higher than the official estimate of inflation by about 4-5 percentage points, while in developed countries, these figures are usually almost identical. In this regard, the Bank of Russia is constantly criticized by business representatives, which are not always able to borrow money on beneficial terms.
Along with this more cautious tactics, which this time showed the controller, inspires some fear. Earlier, the Central Bank allowed a more significant rate cut in may and September of this year he lowered it by 0.5% and in June by 0.75%. “The benchmark for the regulator is 7% — so much the bet was before the crisis 2014. However, in the beginning of 2018, against the promised indexation of pensions and wages, inflation may accelerate — let’s see how it will react to the Central Bank”, — says senior analyst “Alpari” the novel Tkachuk.
It is not excluded that the Central Bank will take a break for a few months to better understand in which direction will move the inflation and to check the stability of the ruble. Up to this point the regulator will try to maintain the difference between the growth rate of consumer prices and the key rate in the current 4-5%.
According to the Director for investments IK “Peter trust” Mikhail Altynov, there is another reason why the Bank of Russia will be kept in relation to changes in their rates. “Before the election, the Central Bank will be cautious and will not significantly reduce the rate, justifying it inflationary risks. In fact, the purpose of manipulation with the rate is a stable ruble. Leave high rate — the only way to achieve this result before the elections,” — said the expert.