BOFIT Weekly Review 2015/51
Russian central bank again passes on rate change
The Central Bank of Russia’s key rate has remained at 11 % for over four months now. In its decision to leave rates untouched the CBR emphasized that inflation risks have grown as household expectations of inflation have increased slightly. The CBR noted that even though the pace of consumer price inflation has slowed, it was still running at nearly 15 % a year in early December. The January on-year figure, however, is expected to fall below 10 % due to the spike in consumer prices last January. The CBR expects that the import restrictions recently imposed on Turkey would only add 0.2–0.4 percentage points to inflation.
The CBR said interest rates on bank deposits and loans are, despite their decline, still rather high and for their part stifle borrowing. The CBR noted several other factors hurting corporate borrowing and investment, including economic uncertainty, stricter bank lending rules (e.g. tougher collateral requirements), limited access to foreign credit and high levels of corporate indebtedness. The average rate charged on corporate loans in October was about 14 %, while the rate on one-year and longer household loans was 18–19 % and the shorter household lending rate around 25 %.
The CBR also said it was equalising the refinancing rate (a rate that belongs to the past from the monetary policy standpoint) to the key rate from the beginning of 2016. Until now, the refinancing rate had been set 2.75 percentage points below the key rate. The government also confirmed that it would begin to use the key rate in all government regulations as applicable.