MOSCOW, April 30 – RIA Novosti / Prime. Reducing the key rate of the Bank of Russia for 1.5 percentage points was not a surprise for the market. Analysts polled by RIA Novosti news agency, called the decision a “golden mean.” Now they are waiting for Russian banks to gradually reduce interest rates on loans and deposits, and the regulator – further steps to mitigate the monetary policy.
Central Bank decided on Thursday May 5, to reduce its key interest rate from 14% to 12, 5% per annum. At the same time the regulator has left in a release after a meeting of the Board of Directors of the key phrase about the readiness to further ease monetary policy to the weakening of inflationary risks and the cooling of the Russian economy.
Thus, the decision of the Central Bank practically coincided with forecasts of analysts, interviewed by RIA Novosti. They are expected to reduce rates by 1-2 percentage points, and pointed out that the conditions developing in the Russian economy, are favorable for further action in this direction.
The first reaction from Russian banks already have. Two of the five largest bank, VTB, and Gazprombank, just a few hours after the publication of the decision of the Central Bank announced reduction of interest rates on loans and deposits.
Inflation slowed down
According to the Bank of Russia as of April 27 annual inflation was 16.5%, but by April 2016 it must be reduced to less than 8% and up to the target level of 4% in 2017.
The existing high level of annual inflation, according to regulator, mainly due to short-term factors: the weakening of the ruble in late 2014 – early 2015, and trade restrictions.
At the same time the Central Bank sees signs of stabilization in the annual inflation rate and the reduction of inflation expectations. Monthly inflation in March and April have declined to an average of 1% from 3.1% in January and February.
“restraining effect on prices provided decrease in consumer demand in the face of shrinking real income observed in recent months to strengthen the ruble, “- said in a release control.
In his view, the current economic conditions will further slow down inflation and reduced inflation expectations.
market signals
Analysts notes that the decision of the Central Bank was not a surprise for the market, and unanimously expect the regulator to further reduce interest rates.
The indicators of this are the decline in inflation expectations, as well as a significant decline in GDP in the first quarter, and the downside risks to consumer spending, says Raiffeisenbank analyst Maria Pomelnikova. “The Central Bank will be guided by these two factors,” – she said.
Analysts expect that in the next meeting on June 15 the Central Bank has cut rates by at least 1 percentage point, despite concerns that annual inflation may remain consistently high for a few months.
“The market was waiting for a decline of 100-150 basis points. No surprises did not happen. Now we see evidence of this in the foreign exchange market, where the ruble traded conditionally stable,” – said in its turn, Dmitry Savchenko from Nordea Bank.
“If inflation will remain within the expected profile, if the ruble will not show some extraordinary volatility, the lower rates will continue,” – he predicts.
The Chairman of the Duma Committee on Economic Policy, president of the Association of Regional Banks Anatoly Aksakov also hopes that the next time the Central Bank will lower its key rate, and at least another 1.5 percentage points – Up to 11%.
The golden mean
At the same time experts estimate the current decline in the key rate by 1.5 percentage points as a fairly low-key step. The regulator seems committed to “the golden mean” straight out of any side of a rigid nor too soft towards policy chief economist says “Discovery Capital” Daria Isakova.
“The tone of the ruble and comments oil prices clearly become more positive – strengthening of the ruble will provide an additional deterrent effect on inflation, and in particular in this regard, the Bank of Russia lowered its forecasts for inflation and a rise in oil prices will support the economic recovery, “- she added.
The head of the Association of Russian Banks (ARB) Garegin Tosunyan believes that the Central Bank is wise, gradually decreasing rate. “Correct, competent policy – reduction of neat. I was a categorical opponent at higher rates, but mind the sharp decline,” – he said.
“The fundamental conditions allowed the Central Bank to make this step – the ruble is stable, inflation reduced. We would like to the Central Bank lowered the rate to 12%. But the Central Bank, apparently, is now reinsured because the ruble still need to watch how it is stable. Second, you need to watch inflation. It is obvious that the period when we go to grass, that is the end of spring – summer, inflation is usually quite significantly reduced “, – adds Aksakov.
Wagering
Analysts expect banks following the decision of the Central Bank will start to lower your rates on deposits and loans, with the result that will stimulate demand for loans and revive the economy. However, this process is not fast.
In particular, the results of Aksakov 2015 forecasts growth of the corporate loan portfolio by 12%, and an even greater increase in deposits from individuals.
Tosunyan does not expect banks to sharp movements in interest rates. “Immediately one will not respond. Gradually, little by little start to lower (rates) of deposits in the first place, and secondly, of the loan. But, unfortunately, lending is now in a corral that we need a very serious period for a substantial market recovery” – he believes.
Meanwhile, the first signs are already there. The press service of VTB, the second Russian bank by assets, RIA Novosti reported that the bank will reduce interest rates on corporate loans in proportion to the reduction in the key rate of the Central Bank.
In turn, Gazprombank, the third largest bank in the Russian Federation, with May 1 lowers interest rates on ruble and foreign currency deposits, told RIA Novosti deputy chairman Alexander Sobol Bank. Interest rates on ruble deposits will be reduced by 1-1.6 percentage points for foreign currency – to 0,1-0,65 pp.
With regard to interest rates on loans, the bank decides After monitoring their changing interest rates on the market.
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