The Bank of Russia has kept its key rate at 11% – Kommersant

The Board of Directors of Bank of Russia kept its benchmark rate unchanged at 11% per annum due to the risk of accelerated price growth and inflation deviation from the target at the end of 2017. The regulator said that in case of increasing inflationary risks, he does not rule out tightening monetary policy.

kept its benchmark rate unchanged at 11%, the Central Bank about his plans and gave a forecast of the further development of the situation. First of all, the regulator noted that against the background of the new wave of decline in oil prices monthly consumer price growth has stabilized at a high level – increased the risk of accelerating inflation. Instead of phrases from the December press release to resume lowering the key rate at a future meeting of the regulator warned of a possible tightening of its policy. “In the case of increasing inflation risks, the Bank of Russia does not rule out tightening of monetary policy”, – he said the Central Bank predicts decline in the annual inflation rate to less than 7% in January 2017 and up to the target level of 4% by the end of 2017.

Oil prices in 2016-2017 is likely to fall below $ 50 per barrel (the level previously expected in the baseline scenario of the Central Bank). But floating exchange rate “will partially offset the negative impact on the economies of low energy prices,” but need further adaptation of the balance of payments and the economy to lower the prices for Russia’s main exports. Recall, according to the baseline scenario of the Central Bank (with $ 50 per barrel) decline of the economy in 2016 is expected to reach 0.5-1% in stress scenario ($ 35 per barrel), the decline of Russia’s GDP could be around 2-3%.

CB said that for the time elapsed since the December meeting of the Board of Directors increased the risks to price stability. “The continued oversupply in the oil market, slowdown in the Chinese economy, as well as raising the interest rate the Fed led to a further drop in oil prices,” – says the Bank of Russia. Now he expects that additional adaptation period may take several quarters. “The growth rate of GDP will be released in positive territory in 2017, but will be low,” – said in a press release.

The next meeting of the Board of Directors of the Central Bank to the question of size, the key rate is planned on March 18, 2016.

The head of the Center for Macroeconomic Analysis Alfa Bank Natalia Orlova on air “Kommersant FM”: «Of course, the market would be comfortable in terms of further rate cuts, but it is clear that the decision on interest rates caused the fact that inflation remains high and, ultimately, economic activity is crucial to slow down inflation, so the short term, we can probably talk in terms of investment activity of companies that, for a number of issuers, for some companies it is not very good news. Many of them would prefer, of course, to see a rate cut. But from an economic perspective, the decision and the comments of the Central Bank indicate a very sound economic policy, so I think it’s good news that a hard comment. ” Read more

Adviser on Macroeconomics CEO” Opening Broker “Sergei Hestanov on air” Kommersant FM “: « Central Bank in terms of the decision on the rate is between two fires: the part of experts who are primarily sector real economy, insist that the key rate should be reduced in order to increase the availability of credit, the other part says that the key rate, on the contrary, must be enhanced in order to, on the one hand, to contain inflation, on the other hand, to prevent further weakening of the ruble. Accordingly, this antagonism leads to the fact that the most likely scenario becomes a so-called solomonovo solution where everything remains as it was before “. Read more

Vadim Visloguzov