The forecast decline in GDP for the second quarter of 2020 may be revised by the Bank of Russia to the downside, however, the Central Bank sees no reason to believe the situation in the economy deteriorates. The regulator has no reason to expect any quick recovery or a long stagnation. Peak growth “bad” debts of banks in the crisis as to absorb losses, will be between the fourth quarter of 2020 — the second quarter of 2021, it will not lead to losses of the whole banking sector for the year 2020. This is the main statement of the head of the Central Bank Elvira Nabiullina at a press conference on Friday at the regulator to more confidently assess the nature of the “epidemic” of the crisis and does not believe that its resolution will require urgent action.At Friday’s press conference Elvira Nabiullina presented the first data on the preliminary results may 2020 for the Russian economy and made several posts clarifying the assumptions of the regulator about its vision of the economic dynamics in the next months. This time, the Bank of Russia has the ability to use data summarizing the may “solid” quarantine measures, some of them released yesterday published in the Bulletin of the Central Bank “Financial pulse”: they demonstrate some increased secondary effects of restriction of economic activity and the already distinct signs of recovery. So, in the last full week of may (25-29 may), the deviation of the incoming payments in the banking system from the conventional norms amounted to 6.6% versus 11.3% the week before.Central Bank sees lower inflation pressure and the return of the may inflation to measure 4% per annum. Assessment of Rosstat, the consumer price index for may, a 0.3% increase in April, 3% year-on-year, it is almost an exact repetition of statistics may 2019. In June, the Central Bank expects price growth by 0.2–0.4 percent by may, and annual inflation June 3,2–3,4%. Elvira Nabiullina did not support the assumption that in the summer of 2020 we can expect the “zakalivanie” inflation expectations, but the Central Bank assumes that in the summer they will continue to decline.The thesis is that neither the V-nor the L-shaped scenario of economic recovery after this phase of the pandemic (Bank of Russia makes a lot of reservations about what is happening may reflect a different scenario coronavirus epidemic in Russia, but I guess not now lays in the prediction of repeated mass quarantines) irrational, head of the Central Bank confirmed.The Bank of Russia will probably revise the forecast of GDP decline in the second quarter of 2020, as restrictions in some regions (I mean, obviously, first of all Moscow) lasted longer in his assumptions. However, from the words of Mrs. Nabiullina did not follow that this review should be sharp. The Central Bank does not see now the need for drastic action — a promise I��to review by the Board of Directors in June, the reduction of the key rate by 1 percentage point (along with the other suggestions) once again confirmed, but more than four steps in reducing the rate of the Central Bank will not do — it’s too high risk for banks, and this measure, which in the logic of the Bank of Russia reserved under an emergency change. They do not expect the situation develops under the baseline forecast of the Central Bank.The peak increase in bad debts in the portfolio of Bank loans, by assumption, the Bank will have the last quarter of 2020 or later — for the first half of 2021. However, the banking system, according to the regulator, by the end of 2020 will not show a loss despite the absorption of a significant portion of the loss of economy at the expense of profit of last year. The Central Bank, in turn, focuses on the dissolution of the buffers in this period and the beginning of the abolition of the regulatory relief measures to banks, all three processes at the end of this — early next year, will have to go simultaneously. “We do not have cases that systemically important banks have broken the regulations, which would include rule-payment of dividends”,— said the head of the Central Bank.The Bank of Russia still retains its presence in the foreign exchange market: until September 30, will continue selling currency on the transaction with Sberbank (sold about $4.3 billion, the rest — about 1.8 trillion), the Central Bank also warns that in the case of recovery of oil prices above $42 per barrel, the Finance Ministry will stop using the Central Bank to sell currency instantly.Finally, Elvira Nabiullina explained, as the Central Bank, who participated in the development of the government’s “economic recovery plan” would be to participate in it. In “crisis management” events are measures to support SMEs, but otherwise the role of the Central Bank in the coming months in addition to the measures already taken — proactive development of the depth of financial markets.Dmitry Butrin
