what will be the rate
At the Board of Directors meeting to be held on Friday, June 10, the Central Bank will reduce the key rate from the current 11% to 9-10% per year. That is, 1-2 percentage points (pp). Such an estimate was given to socialbites.ca in the analytical department of Sberbank SberCIB Investment Research. In the financial holding “BCS World of Investments”, the range of 9.5-10% per annum was named the most likely. The annual forecast of 9.5% has been verified by the Expert RA rating agency. Banks are confident that the Central Bank will stop at 10% per annum: Gazprombank, Zenith, Ural Bank for Reconstruction and Development (UBRD), Moscow Credit Bank and Russian Standard think so. The College of Economics and the ACRA rating agency agree with the credit institutions’ estimate.
“The Central Bank will lower the interest rate by at least 1 point. up to 10% per year. But there is a high probability that it will immediately drop to 9%. Inflation increase rates are close to zero and the population’s propensity to save is high. The ruble continues to trade close to its strongest levels in four years against the dollar. Inflationary expectations of the population and businesses returned to last year’s figures.
This allows the key rate to return to early February levels unhindered in the very near future. Which is important, given the acute need of the economy for loan funds due to the decline in imports, ”said Igor Rapokhin, senior debt market strategist at SberCIB Investment Research.
Vasily Karpunin, head of the Information and Analytical Content Department at BCS World of Investments, believes that the option down to 10% per year seems the most likely. However, he added that the decision to set the annual rate as 9.5% would be symbolic.
“In the latter case, the rate would revert to its original positions, which unplanned jumped to 20% at the end of February. The Central Bank will lower the rate due to low inflationary expectations, deflation, weak consumer activity, reduced loans to individuals and companies, and still a fairly strong ruble, ”said the Central Bank.
Over the past year, the Bank of Russia has gradually increased the rate – 4.25 percentage points in total. It reached 9.5% per annum after the next revision at the beginning of 2022. Then the regulator immediately increased it to 20% against the background of sanctions. On March 18, the exchange rate was kept at this level. On April 10, the Central Bank reduced the rate to 17% annually and to 14% on April 29. On May 26, the key rate was reduced to 11% per annum.
The rate cut will not affect the ruble
In theory, monetary easing should weaken the ruble, which appreciated 7.5% against the euro and 8.6% against the dollar last week. According to the Moscow Stock Exchange, at 13:15 Moscow time the dollar was worth 58.2 rubles, the euro – 61.9 rubles.
However, the current drop in key rate is even 2 pp. We are confident that it will not affect the ruble exchange rate against American and European currencies, BCS World of Investments, Expert RA, UBRD, Russian Standard, Opening Investments, Zenith.
Anton Tabakh, chief economist of the Expert RA agency, noted that if the Central Bank chooses a step of 2 percentage points, the national currency will not react in any way – a rate cut within these limits is already included in the ruble exchange rate. and the price of federal credit bonds.
“The ruble exchange rate is now a derivative of the balance of trade, export earnings flows and import volumes. The basic rate change factor is partially already included in the market. Therefore, if the consensus is lowered, the dollar-ruble rate is unlikely to react in any way and will remain in the 60-62 range. Euro – in the range of 63-66 rubles.
At the same time, a stronger loosening of monetary policy combined with a reduction of the rate, for example, to 9-9.5% per annum, will be only moderately negative for the ruble,” said Karpunin.
Zenit Bank also noted that after Friday’s meeting, the dollar could reach a maximum of 62 rubles, and the euro – 66 rubles.
“The current decline has already been included in market expectations, so we will not see the impact of the Central Bank’s decision on Friday on the ruble,” said Maxim Timoshenko, director of the Russian Standard Bank’s department of financial markets operations.
The head of the analytical department of Zenit Bank, Vladimir Evstifeev, pointed out that the actions of the Central Bank are unlikely to significantly weaken the ruble, especially in the context of continuing measures to restrict capital movement. “The absence of non-domestics in the domestic foreign exchange market reduces the dependence of the ruble on the key exchange rate,” said the expert.
Igor Safonov, an expert at the Development Center of the National Research University Higher School of Economics, noted that in the third or fourth quarter of 2022, the ruble can be expected to fall to pre-crisis levels. “Import enabled. The period of deposits of the population, which opened in March, will end. Some of this money can be used to buy foreign currency,” he said.
The National Rating Agency agrees with this estimate. According to analysts of the agency, the average exchange rate of the ruble in the summer will be 61-63 rubles. per dollar.