Nabiullina’s constancy: the Central Bank kept the key rate at 7.5% for the fourth time in a row

Experts explained what caused the invariance of the position of the regulator

The Board of Directors of the Central Bank of the Russian Federation at a meeting on March 17 decided to leave the key rate unchanged. For almost half a year, since September 16, it has been at the level of 7.5%. Before that, we recall, there was a cycle of six consecutive rate cuts, which began with an “emergency” level of 20%, set by the Bank of Russia in February last year to save the financial system, which, by the way, succeeded. This time the decision was expected for the market. Experts explained to MK what is behind the unshakable position of the regulator regarding the key rate.

Natalia Milchakova, Leading Analyst at Freedom Finance Global: “According to Rosstat, annual inflation slowed to below 11% in February. At the same time, according to a recent survey of the population of Russia, conducted by the agency “inFOM” in the first ten days of March, inflation expectations of the population have significantly decreased. Compatriots believe that prices will rise by 10.7% in the next 12 months. For comparison, at the end of February, citizens expected inflation at the level of 12.2%. So, in our opinion, the regulator has substantial grounds for keeping the key rate unchanged.

Accordingly, there should not be any significant changes for Russian borrowers and depositors. Moreover, the largest banks have been working to increase their customer base for a long time: some have already reduced interest rates on loans, while others, on the contrary, have increased rates on deposits. The ruble exchange rate can react to the decision of the regulator in any direction, whatever it may be. Until the end of the week, we expect the dollar to trade within 75-77 rubles, and the euro – around 80-81 rubles. The yuan exchange rate will be in the range of 10.8-11 rubles.”

Vladimir Kovalev, TeleTrade analyst: “There is no point in raising the key rate, because its increase is primarily intended to counteract inflation. But, on the other hand, it leads to an increase in the cost of lending, investments, a reduction in business profitability, payment demand and economic stimulation. Such consequences are counterproductive in times of crisis.

But it is hardly advisable to reduce the rate for the time being. So far, the movement of inflation back is fragile, unsettled. There are weighty circumstances that can strengthen it. In the first months of the year, budget expenditures increase with a relative decrease in revenues. Treasury deficit increases, which requires additional money in the economy, counteracting the decline in prices.

The ruble is noticeably weakening. The dollar exchange rate exceeded 76 rubles. It is also pro-inflationary, pushing up the price of imports and fueling the general rise in price expectations.

Geopolitical tensions are not subsiding. The recent banking turmoil in the US and Europe poses additional risks to markets and energy export prices. The combination of such multidirectional factors gives the regulator every reason to maintain stability.”

Albert Koroev, Head of the Stock Market Experts Department, BCS World of Investments: “The Central Bank of the Russian Federation still has the opportunity to keep the key rate at 7.5% in March. Inflation data for February turned out to be better than expected. And due to the base effect of last year, annual inflation will slow down sharply in March, and even though this is a formal story, it may have a positive effect on inflation expectations. Since the previous meeting of the Board of Directors of the Central Bank in February, the ruble has weakened somewhat, which is a pro-inflationary factor. Oil prices have not changed much. At the same time, the difference in rates with US government bonds after the February growth fell sharply against the backdrop of problems with US banks.

Egor Diashov, CEO of the investment company Dialot:

“The rate may be raised in the future, by summer. In the first month of spring, inflation slowed down: in two weeks of March it was practically non-existent. At the same time, government spending is on the rise. The job market is good right now. It can be stated that a certain balance has been found in the economy, in which there is the availability of finance, and there is no inflation in March.

Stability is important for business: the rate for four meetings in a row does not change. This constancy of the regulator has a positive effect on business activity. The second thing that is critical for entrepreneurs is the availability of financial resources. 7.5% is not a prohibitive rate, as it was when it was 20%, that is, at the current level of this indicator, lending is developing. For example, we see an annual growth in lending in the segment of small and medium-sized businesses by more than 20%.”