The main arguments for further tightening of the Central Bank’s monetary policy were the continuation of increasing inflationary pressure in Russia and the dominance of pro-inflationary risks (staff shortage in the labor market, soft budget policy, uncertainty regarding the ruble exchange rate). rate and the population’s inflation expectations increased.
The Bank of Russia has confirmed its intention to return inflation to its 4% target by the end of 2024.
“Therefore, the Central Bank now needs to continue to act harshly. Interest rate decisions affect inflation with a lag of three to six quarters. By raising the key interest rate, the Central Bank aims to cool the still high lending rates and reduce excess demand in the economy in order to slow down the increase in consumer prices and return inflation to the target in the planned period,” said Mikhail Vasiliev, chief analyst of Sovcombank.
He said it was unlikely that inflation would return to the 4 percent target before 2025.
“We expect inflation to rise to 7.8 percent by the end of this year, rise to 8.5 percent by the middle of next year and slow down to 6 percent by the end of 2024. At the same time, in our opinion, the risks are shifting more towards high inflation,” Vasiliev explained.
What will happen to the ruble exchange rate?
According to Vasiliev, the Central Bank’s decision on December 15 will have a moderately positive impact on the ruble in the coming weeks.
“In general, the impact of the key interest rate on the ruble has become longer and more indirect due to the absence of non-residents, Western sanctions and restrictions on capital movements,” the analyst said.
The ruble exchange rate felt the positive impact of the increased interest rate in the last two months due to the contraction of credit activity, including purchases of foreign currency for imports, and the shift of interest in favor of highly valued ruble instruments. returns, added Candidate of Economic Sciences » Mikhail Zeltser, stock market expert at BCS World of Investments.
“Of course, the Central Bank factor worked in line with the standards for repatriation of exporters’ foreign exchange earnings. This increased the overall foreign exchange supply in the market. As a result, the ruble stabilized as expected, the benchmark indicator has been lower since the last meeting of the Central Bank (October 27) 90 rubles Because the dollar was completely right and the ruble recovered after weakening at its peak in October. more than 10%The amount of foreign currency at the time of loss was: increase to 15%“said the economist.
According to him, the harshness of the Central Bank will continue for a long time, and large-scale devaluation waves of the Russian currency should not be expected in the coming months, and jumps in the ruble exchange rate should be attributed to normal stock market volatility.
“The area of 90 rubles per dollar is acceptable for buyers and sellers of foreign currency in the real sector of the economy and allows us to reduce the budget for next year,” Zeltser emphasized.
According to Vasiliev’s predictions, the dollar exchange rate will increase by the end of the year 87-92 rubleseuro – 95–101 rublesyuan 12.2–12.9 rubles. The analyst noted that in the first quarter, the ruble rate may strengthen to 85 rubles per dollar, 93 per euro and 12 per yuan due to the seasonal decline in foreign exchange demand.
What will happen to deposit interest rates?
Vasiliev believes that after today’s increase in the key interest rate, deposit and loan interest rates will increase by a similar amount in the coming weeks.
According to analyst forecasts, deposit interest rates may rise to these ranges. 15–17%. He added that Russians will thus have the opportunity to invest their savings at a good interest rate.
“Inflation will peak at 8.5 percent in the middle of next year and will drop to 6 percent by the end of 2024. Therefore, the real return on investment this year is expected to be significantly positive,” Vasiliev emphasized.
The press service of the financial market Compare said that, as a rule, banks increase loan and deposit rates quite quickly – no more than three days.
“Accordingly, for those who plan to open deposits, it would make sense to wait about a week and reach an agreement,” the press service added.
Sberbank has already increased interest rates to a maximum of 16% per annum, and VTB on savings accounts to 16%. Secondly, he stated that if the key interest rate is increased further, the bank will return to the interest issue again.
“This morning we increased deposit rates. Currently, our maximum rate is 16.5% per annum. Frequent revisions to the interest rate in 2023 and subsequent new offers from banks have significantly increased the mass of depositors who are actively studying the conditions of different banks and moving their funds “Taken together with the fact that December is traditionally considered a high season for the banking market, we expect increased interest in new offers from banks following today’s interest rate increase,” he said.
What about loans?
BitRiver financial analyst Vladislav Antonov admitted that loan interest rates will increase by 0.5-1 percentage points. Assoc. Prof. Head of the Financial Control, Analysis and Audit Basic Department of the Main Control Department. It is named after the REU of the city of Moscow. GV Plekhanov Dmitry Osyanin.
The economist added that the market mortgage rate could rise to 20-21%.
According to Vasilyev, rising credit prices will reduce consumer and investment demand, including import demand, and reduce the demand for foreign currency. And the increase in deposit rates will increase the attractiveness of ruble savings and increase the demand for rubles.
Vasiliev said savers and borrowers in general should be prepared for the fact that the Central Bank’s process of tight monetary policy may last a long time and the interest rate may remain in double digits throughout 2024 and possibly part of 2025. .
“With the current maximum interest rate at the top 10 banks at just over 14 per cent, there is a further possibility of a slight increase, but deposit yields may already fall following the trajectory of Central Bank interest rates by mid-2024. Therefore, short-term deposits are now the most attractive, but if there is no urgent need, it is better to avoid loans,” concluded Zeltser.
According to Osyanin, When it comes to loans, you should expect the rate to fall in the 7-9% range.he explained. However, according to the expert, this will not happen anytime soon.
The press service added: “Applying for a loan takes some time and it is unlikely that you will be able to get the loan in time before the Central Bank’s interest rate increases – so it makes sense to take the loan when the need arises.” Compare.
What will happen to the key interest?
The Bank of Russia left a neutral signal regarding future actions depending on incoming data. In the base scenario, Vasiliev expects the increase in consumer prices to slow down in the coming months due to the stability of the ruble exchange rate and tight monetary conditions.
At the next meeting of the Bank of Russia on February 16, he admitted: The lock will maintain the rate It is currently at 16%.
“In the base case, we believe 16% will be the key interest rate top in this cycle. The opportunity to reduce the interest rate will open only in the middle of next year, when inflation begins to slow down. “In the basic scenario, we expect the slowdown in price growth to 6 percent and the key interest rate to 12 percent by the end of 2024,” Vasiliev said.
In a risk scenario, the analyst allowed the interest rate to be raised to 17% at the next meeting on February 16 if inflation does not slow down in the next two months.