Print Central Bank of Russia at the last meeting of 2016, kept his promise and kept the size of the key rate at 10%. The regulator takes a pause from the September meeting and can go back to monetary easing in the first half of 2017, subject to the availability of “trends towards a sustainable reduction in the rate of growth of consumer prices”. Thus, for 2016, the Central Bank lowered the key rate by 1% (or 100 b. p.), notes in the article Anna Ustinova, senior analyst at “KIT Finance broker”.next year’s planned 8 meetings, the first of which will be held on 3 February 2017 and will be accompanied by only a press release, a press conference of the head of the Central Bank of the Russian Federation on the results of this meeting will not. If we assume that at the end of each session, the rate will be lowered by 0.25% (25 b. p.), by the end of the year, reaching the level of 8%. Of course, the Central Bank will pay attention to the dynamics of inflation, the existing monetary realities, the state of the economy and on inflation risks, the totality of the above factors can make their adjustments, but significant deviations from the designated levels of the key rate can be expected.
One of the priority tasks of the Central Bank is to reduce inflation to the targeted level of 4% in 2017. This can be called a KPI for the CBR. In this task, the regulator is to cope quite successfully. Annual inflation as at 12 December fell to 5.6% from 6.1% in October, according to data published by the CBR. Recall that the weekly inflation remains at 0.1%, this increase was recorded in 10 of the 12 previous weeks. With the beginning of the year the price growth amounted to 5.2%. Thus, in 2016 we can finish with inflation at 5.7-6.0 per cent.
Among the factors exerting a downward pressure on the growth rate of consumer prices in Russia, we note the contribution of the dynamics of the ruble on the background of higher-than-expected level of oil prices, and in connection with the maintenance of high interest of foreign investors to Russian assets. With regard to the target value of 4% next year, when the circumstances indicated the levels theoretically possible to achieve. But if you focus on market indicators, for example to use as a benchmark inflation-protected bonds (OFZ 52001), then the market indicates that inflation is not below of 5.63% in the next few years.
Returning to rate of the Central Bank, you need to understand that even 8% (i.e. the most optimistic forecast from the point of view of mitigating DCT) is high rate. Monetary policy will remain fairly tight, otherwise the KPI will fail. Nevertheless, real interest rates in the economy will decline faster than the key rate. This will contribute to the strategy of the Central Bank for the replacement of ruble REPO auctions Deposit auctions.
simply put, a corridor Deposit and lending rates will move down, bringing the interest rate closer to the key and the Deposit will be much lower. So Deposit rates around 5-6% a year – quite a likely prospect. So it makes sense to fix the high yield now, while the market provides such opportunities, for example, investing in long bonds.
the past year has shown that market participants follow the level of interest rates, the Central Bank, so expect a further reduction. In other words, after the key rate reduced Deposit yields and loan rates. For the last 2 years average maximum interest rate on ruble deposits of 10 Russian banks attracting the largest volume of deposits in the country fell from 15.34% to 8.67%.
next year, the regulator plans to continue to soften monetary policy, and interest rates on deposits in turn may fall to 6% per annum, which will certainly reduce the interest of the population to the placement of accumulated funds in Bank accounts.
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