Economist Milovidov spoke about the reasons for the decline in investment in Russia

The high level of the key interest rate has a deterrent effect not only on external, but also on domestic investments. Vladimir Milovidov, Deputy Director for Science of IMEMO RAS, Member of the Board of the Russian Academy of Sciences, Doctor of Economics, told about this on July 25 at the Izvestia News Center during a round table on the topic: "Key rate: forecasts, risks and opportunities."

According to him, attention should be focused not on foreign investments, but on domestic reserves. Milovidov pointed out that large Russian companies with free cash prefer to keep them on deposits rather than launch them into investment projects. This is because the profitability of bank deposits often exceeds the expected profitability from the implementation of new initiatives.

"The 18% rate is exclusively a bank rate. But never mind the foreign investors. The problem is much deeper. Many large enterprises receive a higher deposit rate than the estimated rates for investment projects," the expert noted.

He explained that, for example, if the investment committee within the company approves a project with a yield of 7%, and at the same time the available funds on deposit bring 18-20% per annum, then economic logic suggests to abandon investments and keep capital in the bank.

According to Milovidov, it is precisely high interest rates that slow down investment activity in the country. In 2023, the growth was 5%, and in 2024, according to him, it is barely reaching 1.5%.

Waiting for the key: the dynamics of the ruble exchange rate will be determined by the outcome of the Central Bank meeting

Most experts predict a rate of no more than 80 rubles per dollar, even taking into account the reduction in the key rate

On the same day, the Central Bank of the Russian Federation lowered its key rate to 18% per annum. It was noted that further decisions on the key rate will be made depending on the sustainability of the slowdown in inflation and the dynamics of inflation expectations. According to the Central Bank's forecast, annual inflation will decrease to 6-7% this year, and return to 4% in 2026.

All important news is on the Izvestia channel in the MAX messenger.