The bet has reached its height – Kommersant FM
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The Central Bank raised the key rate for the third time in a row. In just one month it rose by 450 basis points, to 13%. Despite the fact that analysts did not rule out maintaining the indicator at the same level, the Bank of Russia not only increased it by a percentage point, but also again gave a tough signal for this and next years.
This means that, unlike 2014 and 2022, the period of high rates will be prolonged, warned the head of the regulator, Elvira Nabiullina: “Given the actual acceleration of price growth, we have increased the inflation forecast for this year to 6-7%. GDP in the second quarter grew by 4.9%. We expect growth rates to be more moderate in the second half of the year. The situation on the labor market is still tense.
The financial market has begun to adjust to the tightening of monetary policy, but so far it has not been sufficiently reflected in price conditions and has had virtually no impact on credit dynamics.
In addition to time lags, there are factors that weaken the effect of our decisions. The presence of large-scale preferential programs – primarily for mortgages – supports high lending rates. For a rate increase to work on the desired scale, it needs to be increased more than if such programs did not exist.
Another factor that may be behind strong lending activity has to do with market expectations. Some participants are counting on a repeat of the 2014 and 2022 scenarios, when we quickly moved to easing monetary policy. But the current cycle is different from previous ones.
We raised the key rate due to the realization of inflation risks and will keep it at high levels for quite a long time, until we are convinced of the sustainable nature of the slowdown in inflation.”
The ruble practically did not react to the Central Bank’s decision to raise the key rate. On September 15, the Russian currency was trading in the range of 96-97 per dollar. Last time, when the American currency approached 100 rubles, the Central Bank had to hold an extraordinary meeting. The other day, presidential aide Maxim Oreshkin said that the peak of the ruble’s weakening had passed, since in the fall more foreign currency would come into the country from more expensive oil.
However, the key rate only indirectly affects the exchange rate. First of all, the Central Bank took such a step because of the acceleration of inflation, says Raiffeisenbank chief economist Stanislav Murashov: “In the situation that has developed, there could be different options – the Central Bank simply assesses the existing risks much more conservatively, for example, than it seems to us.
Of course, this is a significant rate increase. Inflation has been accelerating for several months in a row – the regulator could not help but react to this. Moreover, he could not stand aside in a situation where the ruble was weakening. There is a certain increase in lending, and consumer demand is also growing. It seems advisable for the Central Bank to increase the attractiveness of deposits for the population and slightly reduce lending activity.
But we must remember that there are still many non-monetary aspects in inflation. There, relatively speaking, there is a rate, some logistics costs, company costs. You can’t influence this with a bet. They developed due to a specific difficult background. Therefore, the Central Bank will compensate for this moment with the help of a more active influence on the demand side.
As for the ruble, it is assumed that at the end of the year it may strengthen to 85. We are all waiting for foreign exchange earnings from oil to arrive. Probably somewhere in September, October. The game changer, let’s say, will be precisely export revenue, and not some other decisions. Well, unless the authorities decide to introduce capital control, but this is unlikely.”
Elvira Nabiullina noted that it is necessary to influence capital flows and the ruble exchange rate through economic measures, not administrative ones. According to the head of the Central Bank, currency control can only be effective for a short period of time. The regulator will probably be able to cope with rising inflation, but a period of high rates will inevitably reduce economic activity of businesses, says Daniil Grigoriev, an expert at the New Course economists association:
“Lending will somehow decrease. Moreover, as experience shows, small businesses are usually more sensitive to relatively small rate increases. This does not affect individuals so much, given that a significant number of loans issued are still associated with preferential mortgage programs. At least in the past, judging by historical data, small and medium-sized businesses felt this most acutely.
The change in the rate had little effect on the exchange rate, and with a delay of several quarters, so it is hardly possible to give any unambiguous forecasts here. Speaking about the impact on inflation in this way, if we believe that this is solely a consequence of excess demand and economic growth exceeding potential growth, inflation can indeed be reduced, especially if the rate is raised not slightly, but very much. Then you will fight it successfully, but at the cost, as a rule, of increased unemployment and reduced economic growth.
But if we proceed from the fact that the cause of inflation is largely fiscal policy, that is, changes in oil dampers, export duties on grain, cars, transfer of exchange rates to prices, raising rates will not help much, especially in the long term. It simply cools economic activity and thus tries to reduce inflation, but this only works if the increase is very significant.”
According to the Central Bank’s forecast, by the end of the year the average key rate will be 13-13.6%, and in 2024 – 11.5-12.5%.
Everything is clear with us – Telegram channel “Kommersant FM”.
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