Eight banking analysts and one economist predicted that the interest rate would remain at 16 percent at the Central Bank meeting on February 16. At its last meeting on December 15, 2023, the Central Bank increased the interest rate by 100 basis points for the fifth consecutive time. The Central Bank has maintained its tight monetary policy since July 21, 2023.
“There is no need to increase the interest rate, as inflation has stabilized (about 7.3% at the end of January 2024, after 7.5% at the end of November 2023), citizens’ inflation expectations have fallen and the ruble exchange rate has fallen relatively. stable,” PSB chief analyst Denis Popov explained.
added this The Central Bank does not have enough arguments to reduce interest rates — Inflation risks remain high and a steady trend towards decreasing inflation has not been achieved. The analyst admitted that in the low base environment in 2023, inflation could rise to 8% in spring 2024.
“There is no need to talk about an imminent reduction in the key interest. “The Bank of Russia does not intend to rush and will most likely expect a steady slowdown in price growth, that is, inflation will slow down within a few months.”
– commented Alexey Voylukov, deputy chairman of the Russian Banking Association.
According to Popov, alternative options for decisions on interest rates – lowering or increasing the rate – will not be considered at the meeting in February. Rodion Latypov, chief economist of VTB Group, agreed with him.
“The discussion will be more about the need to soften signals regarding expectations regarding monetary policy or maintain relatively tough rhetoric,” Popov said.
Some experts did not rule out that the Central Bank will discuss various interest rate scenarios. Sergei Konygin, senior economist at Sinara investment bank, believes this The Central Bank will be able to choose between a 1 point increase to 17% or a 0.5 point increase. up to 16.5% and keep the rate at 16%.
Deputy Director of the Financial Markets Department of Home Bank Yuri Latanov admitted that the Central Bank will consider two options: increase the rate to 17% and keep it at 16%and also spoke in favor of the second scenario.
What will happen to deposit and loan interest rates?
Deposit and loan interest rates depend on the interest rate of the Central Bank. When the Bank of Russia increases the key interest rate by, for example, 1 percentage point, deposit interest rates also increase.
If the Central Bank keeps the interest rate at 16 percent, deposit interest rates will remain at a high level of 8-15 percent annually. According to analyst Popov, banks will not change interest rates for now. Voylukov from the Russian Banking Association advised Russians to open deposits at the appropriate interest rate on the eve of the interest rate revision on February 16. Experts recommend opening a deposit for two to three years at once, since in the next two to three years deposit interest “will only fall.”
Popov admitted Deposit rates may start to fall in spring 2024If the current inflation trend continues.
VTB press service advised that when choosing a vehicle and savings period, you should focus primarily on financial goals. They suggested starting with what you need to save for and for how long. The press service said that in current conditions it is profitable to combine deposits and savings accounts.
Like deposit interest, loan interest also increases if the key interest rate increases.
Analysts recommend waiting to apply for a loan now: lower rates on loans without taking into account preferential programs will be at the end of 2024When an active decline in the key interest rate is expected. Experts expect the first reduction in loan interest rates to occur in June.
Vladimir Evstifeev, head of the analytical department of Bank ZENIT, advised applying for loans in the second half of 2024 – then they will be more profitable. Voylukov added that it would be better to take a loan if necessary on the eve of the Central Bank meeting on February 16.
What will happen to the ruble exchange rate?
Keeping the base rate at the current level of 16% will not have a significant impact on the ruble exchange rate. Experts predict the dollar 88-90 rubleseuro – relative 95-99 rubles.
“The equilibrium level is currently 90 rubles against the dollar and 97.5 rubles against the euro, the exchange rate decision will not affect the ruble exchange rate,” said Sergei Konygin, senior economist at Sinara investment bank.
However, the subsequent decision of the Central Bank to reduce interest rates could support the ruble and contribute to the drop in the dollar exchange rate to 83-87 rubles.
Latypov predicted that the average dollar exchange rate will be at the same level in 2024 88 rubles.
What will the prices be?
When the Central Bank increases the interest rate, the purchasing power of the population decreases (people spend less and save more). As a result, the demand for goods and services decreases and, as a result, prices fall.
Popov said that the price increase rate in Russia has now stabilized due to the Central Bank’s strict policy on interest rates. If this rate is maintained in the coming months, inflation in the country will remain between 0.5-0.7 percent on a monthly basis. In the fourth quarter of 2023, this rate was 0.8-1%.
According to the Central Bank, the growth of consumer prices in December and the first half of January slowed down significantly compared to previous months, reaching 6.5% compared to the previous month (-10.2% in November 2023). We are talking about seasonally smoothed dynamics on an annual basis.