Economist Drozdov explained why a ruble deposit can be more profitable than Chinese yuan

This year’s first meeting of the Board of Directors of the Central Bank will take place next Friday. It will decide the issue of the Central Bank key rate. It can be raised, lowered, or left at its current level, that is, by 16%.

Most analysts believe that the regulator will not take risks and will leave everything as it is.

As you know, last year the Central Bank pursued a fairly tight monetary policy. From July to the end of 2023, the key rate more than doubled, from 7.5% to 16%. Such actions by the regulator were due to the weak ruble exchange rate and high inflation.

Today, the economic situation in the country has improved somewhat. Thus, according to Rosstat, in the period from January 23 to February 5 (over the last two weeks), inflation in Russia remained at the same level – 0.16%. And in annual terms it slowed down to 7.2%. And experts are wondering: will the Central Bank interest rate swing (and in which direction)?

Actually, there are no prerequisites for further tightening of monetary policy, because inflation, according to reports, practically does not make itself felt.

However, there are no obvious signs to lower the interest rate, to “give oxygen” to the same industrialists and producers of material assets. After all, for them, low bank loan rates (which depend on the key rate) are a matter of life and death.

In general, the business community is in anxious anticipation. Where will the regulator put a comma in the phrase “increase cannot be decreased”? Although most experts predict that 16% will remain in the near future. Due to the fact that, despite all the successes in macroeconomics, pro-inflationary factors are still strong in society: in particular, wage growth and inflation expectations.

As they say, don’t make a splash while it’s quiet.

“I believe that the Central Bank will leave the key rate at the same level,” explains financial analyst Sergei Drozdov. – As the regulator previously stated, everything will depend on inflation data. The market watched economic indicators, inflation stopped growing, and there was no point in raising the interest rate further.

– So maybe we should lower it? Many people are waiting for this step…

– There is no point in this running around. At the last meeting they raised it, and at the next they took it and demoted it… That’s not how it works. It takes some time to see the results. If they are positive, it is necessary to stabilize them, to make sure that the process has gone in the right direction.

When inflation starts to decline, at least according to statistics and not based on prices in stores, then the key rate will also decrease. Although, I believe that this will most likely happen in the second half of the year. And we shouldn’t expect a sharp decline.

– Does the key rate affect the ruble exchange rate?

– In my opinion, no. Although the regulator is confident that the exchange rate of our national currency has stabilized precisely due to the increase in the interest rate.

A striking example of this is Türkiye. There the key rate is more than 40%, and the lira continues to fall

The ruble began to strengthen only after exporters were forced to sell foreign currency earnings. Also, the key rate influenced the ruble exchange rate, when foreign players were present in our market, they played on the difference in interest rates. But now there are no foreign players.

– Many analysts predict that if rates remain high, Russians will run to banks to open ruble deposits. What do you think?

– I agree, a high interest rate for investors is a good tool. If we assume that 16% will remain in the first half of the year, then the current rate at the bank can be fixed, say, for a year in advance. Under certain conditions, banks provide this opportunity to their clients – to maintain a high rate at the current level.

– So which is more profitable? Buy Chinese Yuan – this is now a popular currency among Russians. Or put money into ruble accounts?

– Let’s take the deposit rate at 15% per annum. If another devaluation of our national currency occurs, it is unlikely to be on such a scale. Moreover, it is still unknown whether it will happen at all. And you will add 15% per year (at a fixed rate).

Historically, when the key rate is high, depositors bring money to the bank and increase their income quite well.