the Board of Directors of the Central Bank at its meeting on 24 April lowered its key rate by 0.5 percentage points to 5.5%. The decision to reduce this figure, the regulator accepts for the seventh time in a row. If earlier in most cases, the rate cut was backed by the financial success of our country, for example, the transition from a deficit to a budget surplus and falling inflation, at the present time such measures of the Central Bank due to the spread of the epidemic of the coronavirus, effectively paralyzing the national economy. Meanwhile, rate cuts seriously threaten the Russian currency — experts do not exclude that in the foreseeable future, the dollar may be close to around 85 rubles.
Sergey Drozdov, an analyst CC “Finam”:
“Reducing the Central Bank rate from the current 6% to 5.5% is necessary to support the domestic economy, specifically to get small and medium businesses a cheaper financial debt. This decision pushes the current market and around the world, the situation in the first place, the spread of coronavirus and the drop in oil prices.
the reaction of the Russian currency on the regulator’s decision, I believe, will be negative the dollar might one day grow from 75 to 76-76. 5 rubles. However, the Central Bank, rather I’ll try not to give “green” to grow too much.
the Bank of Russia will sell the dollars accumulated on the open market that he is actively doing since the beginning of this week. Moreover, such operations will be currency intervention in its pure form, which the Central Bank conducted few years ago. Rather, it will resemble the circulation of money on the stock exchange — selling dollars at the current rate, which compares favorably with their value in previous years, the regulator even be able to earn. In turn, the inflation, the Central Bank will try, as promised, to keep within the 4% indicated in the budget.”
Artem Deev, head of the analytical Department AMarkets:
“In the pre-crisis years one of the main tasks of the Central Bank was to reduce inflation risks, but in terms of a pandemic, the regulator is much more important to support the Russian economy. In a situation when businesses desperately need “cheap” money, and part of the population became insolvent due to declining revenues, loans to commercial sector have become more affordable — this requires the reduction of the key rate. The regulator could go for conservative decision —decrease by 0.25% to 5.75%, but chose a more radical decline of 0.5% to 5.5% per annum. Perhaps at the next meeting of the regulator once again cut rates as the specialists will take the time to calculate the damage done to the Russian economy coronavirus”.
Royal albert koroi, an expert on the stock market “BCS”:
“In the current environment of falling demand and a gradual roll��ia to the collapse of the world economy, the decision to reduce the key rate of the Central Bank looks quite justified. The differential rates of the Bank of Russia and rates in other countries increased by reducing them in other jurisdictions, the most important of which is the United States.
the Collapse of the Russian currency may continue, and some time later, the dollar could come close to the level of 85 rubles, while above this level of “green” is unlikely to go away. Inflation on the horizon several months, is likely to grow in the medium term it may be slightly raised above Central Bank targets — that is, around 5%”.
Read also: the Bank of Russia lowered its key interest rate
