the Board of Directors of the Bank of Russia on April 24 will probably reduce its key interest rate, which remained unchanged at 6% since February 10, 2020. Forecast a rate cut this time is a win-win. Justification of any difficulties does not cause. Economy “samotorova”, that is, it simply quietly crashes. The authorities, naturally, are seeking funding support. The proposed Toolbox has issues, and chief among them: why there is no direct monetary support of the population, because people and not banks and “systemically important” companies were first under attack. But in any case it is clear that the crisis must mobilize and CB, and help the economy – is, above all, more affordable loans, the price which dictates the key rate. In addition, one of the parties to the crisis – lack of demand and, therefore, carefully to wait for the slower growth in prices. The Central Bank has particularly vigilant in watching their main target – inflation.
a week before the meeting of the Board of Directors, the Chairman of the Central Bank Elvira Nabiullina spoke candidly as ever. On 17 April she said: “I Think we can consider the question of reducing rates at the next meeting of the Board of Directors. We, as always, consider the range of different economic scenarios and rate what you have the space for easing of monetary policy and what steps are reasonable for us to move.” It says very clearly.
Hearing a hint Nabiullina, the expert community, of course, practically ceased to doubt the outcome of the meeting of the Board of Directors. It should result in only one citation, owned by Georgy Vashchenko of IR “freedom Finance”, it reflects the view of most market analysts are waiting for the regulator “to reduce rates by at least 0.5 p. p.” That is, the new rate is expected should not be above 5.5%.
If everything is so clear, what do say? The hitch is that between April 17, when Nabiullina opened the card, and on April 24, when the decision should take place, it was April 20, with the crash in the oil market, when the price of the coveted barrel of an unprecedented left in a minus. We live in Russia, and who would that we talked about the fact that the ruble off of its oil addiction, we know: 20 April proved costly, and will hiccupped ruble. Let it drop wasn’t vertical, but on the other hand, it is impossible to imagine a negative ruble quotes.
the question Arises: ruble under the double shot (the first one from the pandemic), he is weak, and the whole economy, and also oil fell sharply, pulling him along, is the Central Bank will not support the national currency? The policy of the Central Bank and personally from Elvira Nabiullina a lot of detractors, and they will not fail to play this card. However, if the Central Bank suddenly leave rates unchanged, the practicalCesky same critics will be with the same vehemence to accuse the Central Bank in the “betrayal” in relation to the economy as a whole.
critics Such Nabiullina would respond exactly the same as when the captain of Russian national team on football Andrey Arshavin has responded to the criticism of the fans: “We did not meet your expectations, but it’s your problem”. With one significant addition: from Nabiullina this answer would be much more reason.
the question Itself that the Bank does not help the ruble, is not true. Here are reports from the foreign exchange market. 21 and then on 22 April, the Central Bank spent a record-breaking sale of foreign currency – 16.8 and 19.2 billion respectively. Formally, the ruble is freely floating, the sale of currency are carried out in the framework of fiscal rules (they are greater, the steeper the price of oil is deflected downwards from the budget the cut-off price), but there are currency sales of the national welfare Fund to Finance part of the purchase by the government at the Central Bank controlling stake in Sberbank. The Central Bank has enough capacity to support the ruble currency intervention at the most critical moment. And such actions are much more effective support through tighter credit policies at the expense of the retention rate. And without negative side effects for the economy. CB is able to spread via different channels of a rate cut and support the ruble.
As the rate cut will affect the economy, we can see immediately, while the coronavirus covers the entire review, but in our life, some things can change, and quickly. On the one hand, after mortgage, reduced interest rates on which is under presidential control, cheaper and other loans, including consumer. On the other hand, will continue to decline in rates on Bank deposits.
most Importantly, from rate of the Central Bank removed the quarantine. It’s a start.
