The Central Bank sees no risks to financial stability – Kommersant
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Head of the Central Bank Elvira Nabiullina during press conferences stated that in 2023 the economy grew beyond its potential, the regulator responded to this by increasing the key rate. She noted that the regulator’s basic forecast does not imply risks to financial stability. According to her, a reduction in the key rate could occur in the second half of 2024.
Ms. Nabiullina noted that the size of steps to reduce the rate will be determined by the rate of inflation slowdown and data on inflation risks. According to her, the key rate reduction will take the form of “consistent” and “smooth” steps. She explained this by saying that now “we are talking about a gradual cooling of inflation after overheating of demand, and not about a rapid slowdown in inflation.”
Ms. Nabiullina also noted that inflation could be affected by an increase in housing and communal services tariffs planned for the middle of the year. According to her, the Central Bank, in this regard, expects an indicator of 4–4.5% by the end of 2024.
Elvira Nabiullina also said that the Central Bank’s basic forecast does not assume a recession in the economy and risks to financial stability. “There are no such risks. This can also be seen in applications for loan restructuring: in cases of sharp increases in rates in certain periods, the number of applications for restructuring sharply increased. We practically never see this,” she noted.
At today’s meeting, the Central Bank kept the key rate at 16%. In the release on the key rate, the regulator noted that the return of inflation to the target and its further stabilization near 4% implies a long period of tight monetary conditions. Prior to this, the rate was raised five times in a row – by only 850 basis points. In December it was increased from 15 to 16%. In November 2023, Elvira Nabiullina spoke about plans to reduce the key rate as the inflation rate approaches 4%. In December, the Russian Ministry of Finance predicted that inflation in 2024 would be 4.5%. At the end of last year, inflation was 7.59%.
About how the high key rate affected lending – in the publication “Kommersant” “Cash in small change”.
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