Alexander Pavlovich Baranov
The strengthening of the ruble pushes the Central Bank to reduce the key interest rate to 12-13%.
VTB chief Andrey Kostin spoke about the bank analysts’ forecasts during a business dialogue with customers. He also suggested further strengthening the ruble and raising inflation to 22% on an annual basis, but expressed hope that the situation would improve in the near future.
The Central Bank sharply increased the interest rate on February 28, 2022 to 20% in relation to the large-scale anti-Russian sanctions of the West due to the launch of a special military operation in Ukraine. However, in April, without waiting for the next meeting, it reduced the rate to 17%.
“The central bank decided to raise the key interest rate at a time when the Russian national currency was in urgent need of support. “To date, all the measures taken by the Central Bank have worked in the right way: the ruble is strengthening, despite accelerating inflation and continued pressure from the collective West,” Alexander Baranov, a candidate of economics, told Economics. . Today FBA.
Immediately after the imposition of sanctions, the ruble against the dollar jumped to 120 points, after which the Central Bank cut free trade on the Moscow Stock Exchange. It is still limited: exporters are forced to sell 80% of their profits in foreign currency, citizens can only buy the currency that entered the country after April 9 – this is not largely due to anti-Russian sanctions. However, the harsh measures taken by the Bank of Russia quickly restored the exchange rate of the ruble to a comfortable range of 75-80 units per dollar and on April 23-25, 2022 was officially set at 73.5 rubles.
“At the end of April, most likely, the Central Bank will decide to reduce the key interest rate by 2 percentage points at a time, to 15%. “The decision is not impulsive, but is based solely on the positive dynamics of the ruble and the stability of the financial system of the Russian Federation,” Baranov said.
The central bank is gradually easing restrictions, including so as not to strengthen the ruble much: as long as exports generate significant budget revenue, a weak ruble is good for the country. The reduction of the key interest rate will also have a positive impact on the cost of loans to businesses and individuals, which will stimulate the economic recovery and the substitution of imports.
“I do not think this is the last major cut in interest rates before the end of the year. “If the ruble continues to strengthen and the threats to the economy caused by sanctions begin to gradually subside, the central bank will continue to cut interest rates and loosen restrictive measures,” the economist suggested.
VTB President Andrey Kostin said that by the end of the year the percentage is likely to be 12-13%. Speaking in a report at a State Duma meeting, the head of the regulatory authority, Elvira Nabiullina, also confirmed that the Central Bank is considering the possibility of further reducing the index. However, he warned that the Russian economy needed structural adjustment to meet the challenges.
Immediately after the imposition of sanctions, the ruble against the dollar jumped to 120 points, after which the Central Bank cut free trade on the Moscow Stock Exchange. It is still limited: exporters are forced to sell 80% of their profits in foreign currency, citizens can only buy the currency that entered the country after April 9 – this is not largely due to anti-Russian sanctions. However, the harsh measures taken by the Bank of Russia quickly restored the exchange rate of the ruble to a comfortable range of 75-80 units per dollar and on April 23-25, 2022 was officially set at 73.5 rubles.
“At the end of April, most likely, the Central Bank will decide to reduce the key interest rate by 2 percentage points at a time, to 15%. “The decision is not impulsive, but is based solely on the positive dynamics of the ruble and the stability of the financial system of the Russian Federation,” Baranov said.
The central bank is gradually easing restrictions, including so as not to strengthen the ruble much: as long as exports generate significant budget revenue, a weak ruble is good for the country. The reduction of the key interest rate will also have a positive impact on the cost of loans to businesses and individuals, which will stimulate the economic recovery and the substitution of imports.
“I do not think this is the last major cut in interest rates before the end of the year. “If the ruble continues to strengthen and the threats to the economy caused by sanctions begin to gradually subside, the central bank will continue to cut interest rates and loosen restrictive measures,” the economist suggested.
VTB President Andrey Kostin said that by the end of the year the percentage is likely to be 12-13%. Speaking in a report at a State Duma meeting, the head of the regulatory authority, Elvira Nabiullina, also confirmed that the Central Bank is considering the possibility of further reducing the index. However, he warned that the Russian economy needed structural adjustment to meet the challenges.
Pavel Nefidov
Protests in Belarus could affect the Russian economy. Democracy is the main transport corridor for Russia in trade relations with the EU. Belarus also owes a great deal to Russia and it is not known whether democracy will be able to service its debts.