Nabiullina calls talk of freezing deposits in banks nonsense

Talks about freezing deposits in Russian banks are nonsense. This was announced by the head of the Central Bank of Russia (CBR) Elvira Nabiullina during a speech in the State Duma on November 19.

"What can I say? I can say that it is probably hard to come up with a bigger nonsense than this idea. We are really being frightened by it somehow. <...> Well, in the professional environment these scenarios are not discussed at all. Because they are completely devoid of sense," - she said in response to a question about the risks of non-fulfillment by banks of their obligations to depositors.

According to the head of the Bank of Russia, banks pay interest on deposits at the expense of interest on loans, as they are always higher than deposit rates. Nabiullina pointed out that businesses take loans at such high rates in the expectation that the rate will go down.

At the same time, she added that the Central Bank will lower the rate only when the inflation rate goes down, calling this process manageable and orderly.

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To what level it can be raised and why it is necessary to do it now

Earlier in the day, Nabiullina said that if Russia does not face additional economic shocks, the Central Bank could start lowering the key rate as early as 2025. She pointed out that such a tactic of the Central Bank will allow to reduce inflation in the country to 4.5-5% in 2025, and then stabilize this indicator at about 4%.

Prior to that, on November 12, representatives of the Bank of Russia denied the statement of State Duma deputy Maria Prusakova about the alleged plans of the Central Bank to start reducing the key rate in the spring of 2025. Prusakova noted that Nabiullina at a meeting with the CPRF faction allegedly promised that the key rate will be reduced from March and will gradually reach the level of 2023. However, the Central Bank of the Russian Federation said that the words of the deputy do not correspond to reality.

Before that, on November 11, financial expert Alexei Krichevsky told Izvestia that the Central Bank's Board of Directors may raise the key rate again in December. In turn, Elman Mehtiyev, founder of the Kredchek service, noting the Central Bank's influence on inflationary processes, specified that there is a decrease in the rate of retail lending and its role in the acceleration of inflation. However, there is also the effect of previously postponed decisions, including the indexation of the cost of housing and utilities services, he added.

The Central Bank of Russia's Board of Directors raised the key rate to 21% on October 25. The head of the regulator Elvira Nabiullina said that during the meeting three options were considered: to raise the rate to 20%, to 21% and higher. She specified that the option of maintaining the rate level was not considered.