daxioma logo

CB: to reduce the key rate

09 September 2019

CB: to reduce the key rate

6 September 2019 happened a meeting of Directors of the Central Bank of the Russian Federation, after which he was reduced indicator rates - by 0.25 percentage points, which is about 7% per annum. We remind you that earlier rates already fell in June to 7.5% in July to 7.25% per annum.

 

Such movements of interest rates is quite reasonable, there are two main indicators that guide the course:

 

  1. stable slowdown in the rate of inflation;
  2. the total lack of growth in the economy.

 

Strange seems that in August was deflation, however, this can be explained by the fact that the Treasury began to do the debts of other countries.

 

Experts of “MK” expressed his opinion on the subject - “the current step regulator I believe it is logical and justified: inflation is slowing and economic and industrial growth remains weak. The Central Bank lowered the rate, despite the risks of falling demand for oil due to a trade war between the US and China. The reduction of the key rate invariably leads to a drop in interest rates on deposits, and what has happened now is no exception. Therefore, with the discovery of deposits the delay is not worth it. People keep money mainly in large state-owned banks that the decisions of the Central Bank react in the first place. Consumer loans remaining an important driver of GDP growth, also cheaper. As for the ruble, then case event is already incorporated in the exchange rate of domestic currency, so the UPS and downs of unlikely. By mid-September the dollar will cost 66-68 roubles, Euro – in the range of 72 to 74 rubles.”

 

Further, in favor of Sergei Suverov (senior analyst at BCS Premier) - “first, in August, Rosstat recorded a deflation, and secondly, the situation with GDP growth of just depressing, it amounted to only 0.7% in the first half. To get the economy out of the coma a need for urgent action, including monetary nature, and the Central Bank is well aware. In addition, its position could influence the fact that now the world's Central banks simultaneously cut rates for fear of a new recession. If we talk about the geopolitical risks, they have temporarily gone by the wayside. Finally, the rate reduction will not be allowed to form a bubble in the consumer credit market. The Central Bank is doing everything to hinder the activity of the Russians on this market.”