There are hints of growth: experts gave a forecast for the Central Bank key rate

The Central Bank meeting on the key rate will take place on February 16. It will be the first in 2024. Most analysts surveyed by MK believe that the Bank of Russia will leave its main indicator at the current level of 16%. Pro-inflationary factors are still strong. However, there are experts who do not rule out raising the key rate. What, in this case, will be the consequences for the exchange rate of rubles, deposits and loans?

Mark Goikhman, analyst at Capital Skills Financial Academy:

“It is likely that the key rate will remain unchanged at 16%. The main guideline for the Central Bank of Russia is the dynamics of inflation. Rosstat data released on February 14 show that consumer prices rose 7.4% year-on-year in January.

This means that inflation is not slowing down yet. This is exactly what it was like in 2023. And the Central Bank’s goal is 4%. The rate can be lowered when the rate of increase in the price of goods weakens significantly.

On the other hand, there is no point in the regulator raising its percentage. After all, inflation is not increasing. In addition, high rates impede the growth of business and the economy as a whole.

Thus, a fragile optimum was formed. It resembles the “Pareto optimality” principle known in economics. This is a state of the system where any change in the parameter would lead to deterioration. So now the best thing the Central Bank can do is do nothing. Wait. Look. High rates with a certain time lag will help reduce inflation. Probably, talk about cutting the rate can only begin in the middle of the year.

This scenario for the February meeting is the one most expected by market participants. Therefore, this verdict will not lead to noticeable changes in the ruble exchange rate or interest rates on loans and deposits.”

Vladislav Antonov, financial analyst at BitRiver:

“The basic scenario regarding the results of tomorrow’s meeting is to maintain the key rate of the Central Bank of the Russian Federation at the level of 16% per annum. The regulator will give comments in which it may recognize inflation as high and reserve the possibility of tightening monetary conditions in the future. At the same time, after the release of Rosstat data on the consumer price index the day before, there is a possibility that the Central Bank will want to take preventive measures now – and raise the rate. The magnitude of the increase, like other parameters, cannot be assumed. This is just one of the options for the development of events. It all depends on how the Bank of Russia will assess the dynamics of inflation – as a local seasonal phenomenon or as a dangerous trend.

If the rate remains unchanged, the ruble will ignore the news, as will the banks with their deposit and lending programs. At the same time, it is likely that the dollar will remain in a narrow range of 90 – 92.5 rubles. The dollar is unlikely to rise higher after the Central Bank meeting.”

Alexander Shneiderman, head of sales and customer support department at Alfa-Forex:

“After tomorrow’s meeting of the Central Bank, the key rate will remain at the same level of 16%. There are not yet enough reasons to change it in any direction.

Starting from January 1 and ending in the first week of February, inflation was curbed to an acceptable 0.78%, which will allow us to achieve the target level of 7.5% for the year. The dynamics of price growth has decreased.

Thus, the main goal of the Central Bank when raising the key rate—slowing down inflation—has been achieved at this stage.

Among the events that will affect the ruble exchange rate and inflation, I will note the beginning of the purchase of foreign currency and gold by the Ministry of Finance in the amount of 73 billion rubles over the next month.

At the same time, the problem of high lending rates for business and, as a consequence, slow economic growth caused by a lack of working capital for development, remains relevant.”

Oleg Kalmanovich, chief analyst at Neomarkets:

“From January 1 to February 5, inflation reached an acceptable 0.78% – which in annual terms corresponds to a level of 7.5%, which will ultimately stop the rise in prices at around 8-10%. This inflation rate is still above the target of 4%, but the dynamics have noticeably decreased.

The existing policy of the Bank of Russia is bearing fruit, although there is no talk of victory and complete control of inflation.

Based on the results of previous meetings, we can assume some hints about a possible increase in the key rate as early as next month.

The key bet is a tool that can easily be overdone. High lending rates can seriously slow down the emerging economic recovery.

We also note that the plan to mirror the Ministry of Finance’s measures, which will purchase foreign currency and gold within a month, risks failure due to the insufficient volatility of the ruble relative to the yuan: the Chinese currency is rapidly becoming more expensive, and an imbalance in the relationship between supply and demand may arise. The reason was the United States, which threatened sanctions against Chinese banks that would continue to serve Russian entrepreneurs. This is a wake-up call, and the consequences need to be addressed now.”