Experts expect problems from the Central Bank: the key rate will not be reduced

On Friday, February 10, the first meeting of this year will be held at the Central Bank, where the issue of the key rate will be decided during heated discussions. Lower it or leave it at the same level of 7.5%. What does the key rate give to the economy and why are heated debates expected around it?

According to open sources, our government is vitally interested in lowering the key rate of the Central Bank. This will pave the way for cheap loans, which business will start investing in the development of production and the creation of jobs. Life, accordingly, will become better and life will become more fun.

The Central Bank, headed by Elvira Nabiullina, is a serious opponent of the Cabinet in this matter. The regulator is not directly interested in revitalizing the real sector of the economy. His sacred task is to curb the growth of inflation by any means. Which is held back by the high key rate.

We struggled with high inflation throughout the past year, and eventually reached the level of 11.98%, gradually reducing the rate from 20% to today’s 7.5%.

The last three meetings of the Central Bank ended in nothing, despite heated debates, the key rate was left at the same level.

We must admit that we even got used to it. Not to say that the Russians feel so good, but not bad either, products are becoming more expensive, like all previous years, by 5-10% – and that is already stability.

The Central Bank has its own vision of prospects. This year, he predicts the rate in the range of 6.5-8.5%, in 2024 – 6-7%, and in 2025 – 5.6%.

On the eve of the meeting of the Central Bank, we asked the candidate of economic sciences, financial analyst Mikhail Belyaev to talk about his expectations

– The Central Bank is firmly in favor of not reducing the key rate, and maybe even slightly raise it, – he believes. – The Cabinet of Ministers takes a clearer position and, as a first step, proposes a reduction in the rate by at least half a point, to 7%.

– So whose side will take, it will be stronger?

– The economic rationale is on the side of the government, which is for a reduction and, accordingly, for cheap loans to production. However, everything will depend on the hardware weight of the meeting participants. The top will be taken not by common sense and not by economic expediency, but by behind-the-scenes intrigues, who will “squeeze” whom.

– What is your forecast?

– I’m afraid that the Central Bank will win again. Also for the reason that when the president evaluates the work of the government for a certain period, he necessarily positively notes the activities of the Central Bank. Which is successfully coping with inflation, and is struggling with something else. Based on this alignment, I assume that the Central Bank will win.

– If the key rate remains at the same level, will nothing change in our economy? So we will “go with the flow”?

– How will it not change? The industry will become more difficult to work. Evidence that the economy is not all right – the ruble, which is declining against the dollar and the euro. And most importantly, it falls against the yuan, a currency that is regulated by the Chinese government.

Our economy has stalled. The crisis phenomena have been overcome in the US and the EU, the Europeans have been helped by a mild winter, lower energy prices, and the economy there has entered a positively stable state.

The high key rate is hard to bear by our economy. Therefore, it must be reduced.

– The government predicts inflation in 2023 at 4%, the Central Bank “gives” 6%. What do you think it will be real?

– I think not less than 8%. Inflation depends not so much on monetary factors as on the activity of retail and wholesale trade. Which raise prices at every opportunity and disperse inflation. Since no one is going to fight the traders, in my opinion, it will be at least 8%.