The economist explained the reason for the reduction of the key rate of the Central Bank
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“Regulator is moving forward”
On September 16, it became known that the Central Bank of Russia lowered its key rate by half a percentage point to 7.5%. Economist and analyst Alexander Razuvaev is convinced that its decline will have a positive effect on the domestic economy, and next year the downward trend will also continue.
In conversation with “Evening Moscow” Razuvaev noted that the market and analysts were expecting a rate cut to 7.5%, there are no surprises in this. According to the expert, such unanimity was the first time in a long period. He stressed that Russia is experiencing a decrease in inflation, there was deflation in the summer, and the government believes that a reduction in the key rate will be able to support the real sector of the economy. According to the economist, the decision of the Central Bank of the Russian Federation is neutral for the ruble and the stock market, since everything was included in prices.
The analyst believes that in the near future, domestic banks will continue to reduce rates on both loans and deposits. Moreover, as Razuvaev noted, the decline will be even faster, given the expectation of a further reduction in the key rate by the Central Bank.
In real terms, according to the economist, the rate is negative, inflation is higher, but “the regulator is ahead of the curve.” Razuvaev noted that, ideally, the key rate should be slightly higher than inflation. The expert clarified that this year there was a big jump, and now inflation is stabilizing and, according to his forecast, will reach 12% by the end of the year, and less than 10% next year.
The specialist suggests that in order to support the real sector, the Central Bank may reduce the key rate to 7% by the end of the year and to 5-6% by next summer. Lower, according to Razuvaev, it will not fall, otherwise the rates on deposits will become completely unattractive. The economist recalled that the historical minimum of the key rate in Russia is 4.25%.
Read also: The Central Bank lowered the key rate: what will happen to the ruble and deposits
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