The Bank of Russia lowered its key interest rate by 0.25% – from 7.75 to 7.5 percent. This is the eighth decrease in the interest rate, starting from March 2017. This decision was predictable — the head of the regulator Elvira Nabiullina, to follow the wishes of President Vladimir Putin, also insists that the loans of private banking organizations would become cheaper. As respondents believe, “MK” experts at future meetings of your Directors, the Central Bank will continue to move in this direction and by the summer will bring the rate to 7%.
photo: Gennady Cherkasov
Vladimir Tikhomirov, chief economist FG “BKS»:
“Given the low level of current inflation, the Central Bank has the possibility of lowering rates and by a more substantial amount. Based on understanding by the Bank of Russia a “normal” level of monetary policy, with inflation at 2.2-2.4 percent rate should be in the range of 4.2-5.5 percent, which is much lower than it is now. However, on the horizon there will be a lot of risks: existing inflationary trend for a fall can change; in the second quarter could again fall in oil prices; a correction in the global markets due to the tightening policy of the Federal reserve and the European Central Bank; the introduction Washington’s new sanctions against Russia, including a ban on the purchase of sovereign bonds of our country. This means that the Central Bank will approach the issue of easing credit policies cautiously and will take careful steps to change the rate (for example, by 0.25% each time). However, the gap between the level of rates and inflation will remain fairly serious, even if the growth rate of consumer prices will not exceed 4% in annual terms, the rate will remain within 7%.
If Central Bank decides to lower the rate more rapid pace (by 0.5% or more), by the end of March, this may lead to the weakening of the Russian currency to levels above 60 per dollar virtually any. Especially if the Federal reserve is expected to tighten its monetary policy. This ultimately can lead to a situation where the gap in the rates for ruble and dollar-denominated instruments will be reduced. However, amid rising geopolitical risks for Russia (first and foremost, the threat of new sanctions announcements from the US) and falling oil prices, our country will face a new round of capital outflow and increased pressure on the ruble.”
Mikhail Altynov, investment Director IK “Peter Trast»:
“Manipulation of rate of the Central Bank almost does not affect the exchange rate. Attention to the rate in conjunction with the dynamics of the Russian currency is redundant and false. Just look at the movement rates and the value of the ruble in 2014-17: the course “wooden” did not correlate with all the changes in the key rate Bank loans. The idea of the pressure rate of the Central Bank on the ruble comes from the assumptions about the impact of the operations with Federal loan bonds on the ruble. But this influence is not the main factor. Key determinants of the exchange rate of the ruble were and still are the movement of capital on the world market and the dynamics of oil prices. For this it is necessary to pay attention. Enthusiasm for buying attractive ruble-denominated bonds and shares, as well as attitude for storage savings in the Russian currency, will instantly evaporate if foreign investors abandon risky assets in our country or going to happen rapid fall of oil quotations. In this case will not help neither high nor low rate. This year may demonstrate this fact in all its glory”.