The Board of Directors of the Bank of Russia today decided to raise its key interest rate from 9.50% to 10.50% per annum. This is stated in the report of the Central Bank.
The decision of Bank of Russia is aimed at ensuring the slowdown in consumer prices to the target level of 4% in the medium term. In case of further strengthening of inflationary risks the Bank of Russia will continue to increase in the key rate, the report says the Central Bank at the end of the board meeting.
In November – early December, an increase in inflation continued. According to the December 8, the annual growth rate of consumer prices was 9.4%. Core inflation in November 2014 rose to 8.9%. The acceleration of growth in consumer prices due to continuing weakening of the ruble in the II half of 2014. Impact on prices also have trade restrictions imposed in August 2014. However, the rate of rise in price of certain food groups stabilized, which was due to an increase in their proposals by Russian companies and the conclusion of new import contracts. In the context of accelerating the growth of consumer price inflation expectations of the population and the business continued to grow, creating additional pressure on prices, the report says.
According to the Bank of Russia, inflation in 2014 will be about 10%. In this case, the total contribution to the weakening of the ruble, import restrictions and specific factors in the markets of certain food products in the annual growth rate of consumer prices for the year amounted to 4.9 percentage points.
“What happened tightening of monetary conditions is not proinflyatsionnyh compensates the influence of factors. However, folding monetary conditions create preconditions to reduce inflation in the medium term, “- the Bank of Russia. According to the December 1, 2014, the annual growth rate of money supply (M2) was 4.8%, down from 14.6% as of the same date last year. Growth rates on household deposits continued, that will stimulate the propensity to save and create conditions for the inflow of funds in bank deposits. Against the background of rising interest rates on loans and the banks’ claims to the quality of borrowers and ensure there is a slowdown in lending to the economy (adjusted for currency revaluation). Given today’s decision and lag effects from the earlier decisions of the Bank of Russia in the field of interest rate policy on the economy, this process will continue, according to the Central Bank.
The annual rate of growth of GDP in 2014, according to the Bank of Russia will be 0, 6%. The economic slowdown has not yet expressed a deterrent effect on consumer price inflation, as is largely due to structural reasons. Load factors of production – labor and competitive production facilities – at a high level. In this case, productivity is growing slowly. Due to long-term demographic trends observed decline in labor supply. A negative impact on economic activity have also preserve foreign uncertainty and significant deterioration in the external environment due to lower oil prices and the closure of the external financial markets for Russian borrowers, says the Central Bank.
In the face of rising prices for imported investment goods limited availability of long-term financial resources and the tightening of credit conditions fixed investment declining. At the same time, despite the significant slowdown in growth in real wages and retail lending, there has been some recovery in consumer activity, due to an increase in demand for non-food products amid rising inflation expectations. Exchange rate dynamics partly compensates for the negative effect of deteriorating external environment and contributes to the competitiveness of Russian goods. In addition, restrictions on imports of certain food products support appropriate sectors of the economy, the report said.
Due to the significant change in external conditions the Bank of Russia revised its forecast of macroeconomic development in the medium term. In the next three years economic growth will be lower than previously projected in the baseline scenario, which is due to persistence of oil prices at a lower level. In the years 2015-2016 will be close to zero annual growth rate of GDP. In terms of conservation restrictions on access to international capital markets for Russian companies and relatively low energy prices will continue to decline in investment in fixed assets. Consumer activity remains weak.
At the same time changing exchange rate mechanism will create the preconditions for a more rapid adaptation of the Russian economy to changes in external conditions. In 2017, the expected slight recovery in economic activity, which will contribute to the development of import-substituting industries and increasing non-oil exports, the Central Bank predicts.
What happened weakening of the ruble will continue to have an impact on prices of goods and services in the coming months. In the 1st quarter of 2015. Inflation may exceed 10%, according to the Central Bank. However, as the exhaustion of the impact of exchange rate dynamics on prices, the gradual adjustment of the economy to changes in external conditions and restrictions on imports is projected to decline in inflation and inflation expectations. Slower growth in consumer prices will also contribute to low aggregate demand while maintaining the total output of goods and services below potential. The monetary policy will ensure the reduction of inflation to the target level of 4% in the medium term.
In case of further strengthening of inflationary risks the Bank of Russia will continue to increase in the key rate. When forming a steady downward trend in inflation and inflation expectations the Bank of Russia will be ready to begin easing monetary policy, the report says.
The next meeting of the Board of Directors of the Bank of Russia, which will address the issue of the level of the key rate, scheduled on January 30, 2015.
Material provided by RBC news
No comments:
Post a Comment