As expected, the Bank of Russia decided to lower the key interest rate – up to 11%. Immediately after the announcement the dollar and euro rates jumped up, as investors expect the weakening of the ruble and buy up the currency.
Following the meeting of the Board of Directors on June 15 the Bank of Russia announced a lowering August 3 key rate by 0.5 percentage points, to 11%. The key rate – is the rate of Bank of Russia loans on securities (repo) for a period of seven days. “The Board of Directors decided to reduce the key rate c 11,50% to 11,00% per annum, given that the balance of risks is still biased towards a significant cooling of the economy, despite some increase in inflationary risks,” – said in a statement the Central Bank.
According to the forecast of the Bank of Russia, slower growth in consumer prices will continue in a weak domestic demand. “In the future, the Bank of Russia will decide on the level of the key rate, depending on the change in the balance of inflationary risks and risks of the cooling of the economy”, – concludes with the Central Bank. The next meeting of the Board of Directors of the Central Bank, which will consider the level of the key rate, scheduled for September 11.
16 December last year the key rate was raised sharply – by 6.5 p. n. – from 10.5% to 17% per annum. The growth rate should slow down inflation and depreciation of the ruble. However, at the time the decision of the Central Bank caused a panic in the currency market and led to the collapse of the ruble. Then, beginning in February the Central Bank almost every month (except April), have begun to reduce the key rate. So, from February 2 it was 15%, from March 16 – 14%, from 5 May – 12.5%, from 16 June – 11.5% per annum.
Experts predict a decrease of the key rate in the past, but some of them initially believed that the rate will lower than 0.5 and 1 percentage point. Analysts attributed Sberbank CIB: this is due to the fact that this week the ruble plummeted. “Probably, the Central Bank chose to be cautious and not to provoke a further decline of the ruble,” – they point out. On Monday, July 27 the price of Russian Urals oil on the spot market fell below $ 52 per barrel, while North Sea Brent – to $ 53.20 per barrel. For oil and ruble assets followed: the Russian currency depreciated against the dollar and euro, respectively, by 85 kopecks. (Up to 59.35 rubles ./$ ) and 1.7 rubles. (Up to 65.94 rubles. / €), updating the four-month low.
Data Exchange of the Moscow show: the dollar and the euro gained 30 kopecks. immediately after the decision of the Central Bank to lower its key rate. “Currency has made a small jump: the dollar at 13:30 jumped to 60.60 rubles ./$ euro – up to 66.60 rubles. Then the situation stabilized, and then again a wave of up to 13:40 currency traded at 66.40 rubles. / € and 60.50 rubles ./$ . The market is volatile, while many expect the weakening of the ruble and buy up the currency “, – says head of the analytical department of the IR” Region “Valery Weisberg.
President of the Association of Regional Banks of Russia Anatoly Aksakov in the air,” Kommersant FM “:« In my opinion, Overall, the situation is under control. The exchange rate, I am sure, too, does not depend on the key rate. Decisive influence the price of oil. And do not even involved, when it comes to exchange rates, such a reserve, as working with exporters who may be asked to make greater efforts to sell the currency once it stabilizes the situation on the currency market. Now, apparently, this special is not necessary. Still sluggish lending. Including the fact that interest rates on loans are too expensive for potential borrowers. Therefore, it is necessary to stimulate economic growth and reduce the activation of lending, respectively, the key rate. The Central Bank is absolutely the right thing, having made this step. We might even want to make it more substantial decline, say, to 10.5%. This rate was in December to a significant increase in the key rate. ” Read more
The ruble strengthened to decrease
On July 29, the Bank of Russia has announced that from July 28 to suspend the purchase of currency on the domestic market. Thus, the regulator took a pause in active currency intervention begun three months ago. Recall that in mid-May Central Bank to replenish gold reserves on a daily basis to buy $ 200 million and during that time has gained a little more than $ 10 billion. Such a move controller was predictable: it was preceded by a sharp increase in volatility in the currency market. Read more
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Open Market Committee of the Federal Reserve System (FRS) the USA July 29 to the end of a two-day the meeting announced the preservation of the size of the base interest rate unchanged. At the same time the regulator did not give the markets a clear signal of the intention to raise rates in the coming months, indicating nevertheless a growing US economy and the growing labor market. Read more
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