- Статьи
- Economy
- Surprise affect: whether the Central Bank will raise the rate in February after a pause
Surprise affect: whether the Central Bank will raise the rate in February after a pause
The Central Bank may have kept the key rate at 21% contrary to market expectations due to dissatisfaction with the regulator's policy on the part of big businesses and MPs, according to experts interviewed by Izvestiya. In the Bank of Russia, the main reason was that the preconditions for slowing down inflation are already in place. In November, business lending cooled down for the first time. However, the risks of price acceleration still remain, the regulator emphasized. The level of interest rates in the economy is obstructive - this creates risks of defaults on bonds and bankruptcy of companies. If prices continue to rise at the beginning of the new year, the Central Bank may need to raise the key rate, experts believe. Whether the Bank of Russia will go for it - in the material "Izvestia".
Why the Central Bank kept the key rate at 21%
The Central Bank unexpectedly decided to keep the key rate at 21%, despite the expectations of analysts. According to Izvestia's consensus forecast, market participants believed that it would be raised to 23%, but they also allowed for a more radical increase.
Monetary and credit conditions in Russia have tightened more than the regulator expected, the Central Bank's press service said. This is due to increased regulation, which limits the issuance of loans to borrowers with a high debt load, as well as worsening conditions on products for bank customers.
- In the coming months, inflationary pressure will begin to decline under the influence of tight monetary conditions and slowdown in lending, - said the Central Bank.
TheCentral Bank's policy forms the prerequisites for reducing price growth and return of inflation to the target of 4%, the regulator's press service specified. Central Bank head Elvira Nabiullina at a press conference noted "significant changes" in credit activity. According to her, the November data showed a "noticeable slowdown" in the growth rate of loan issuance.
Alexei Zabotkin, head of the Central Bank's Monetary Policy Department, added that the regulator has been in close contact with businesses and banks over the past month and a half and has made sure that corporations have changed their plans to increase lending. Finam emphasized that this segment is the most important for the Central Bank when making a decision on the rate.
Nevertheless, inflation risks are still high, emphasized the Central Bank. In October-November, price growth amounted to 11.1% (compared to the same period in 2023), such data the Bank of Russia cited in its release. On the eve of the President stated that the indicator will be lower - 9.2-9.3% for the whole of 2024.
Demand in the economy is still strong, and production capacity is not enough to increase output against the background of a record deficit in the labor market - unemployment has again broken the record and fell to 2.3%, also noted in the release of the Central Bank.
Maintaining the key rate is not an obvious scenario, emphasized economist Andrei Barkhota. The main reason for the Central Bank's rate reversal is a sharp increase in dissatisfaction with its policy on the part of industry and parliament. Experts believe that once the key rate reaches too high a level, its effectiveness decreases - by and large there is no big difference between the rate of 21% and 23%.
Even Russian President Vladimir Putin noted the Central Bank's policy during the "Results of the Year" on December 19. He expressed hope that the regulator's decision on the rate "will be balanced and will meet the requirements of today."
What will be the key rate in 2025
The Bank of Russia has taken a pause in raising the key rate, but it will take a long period of tight monetary policy to bring inflation back to target, Elvira Nabiullina said at a press conference. According to her, the Central Bank may return to the issue of rate increase in February.
At the end of the meeting, the Bank of Russia said that it will assess the feasibility of raising the key rate in February, taking into account the further dynamics of lending and inflation.
However, the regulator's rhetoric on the key rate began to change. Elvira Nabiullina said that the Central Bank's task is not to reduce inflation "at any cost. According to her, it is also important to avoid overcooling of the Russian economy. Whereas before thehead of the regulator insisted on a tougher and uncompromising policy on inflation, before which "one cannot capitulate". Such signals may suggest that the Bank of Russia will not act as decisively in the future.
In the baseline scenario it is expected that inflation will slow down slowly and the Bank of Russia will keep the key rate at 21% throughout 2025, predicts Sovcombank chief analyst Mikhail Vasiliev. However, an increase at the next meetings is also acceptable - if the market is too positive about today's message, there will be excessive easing of financial conditions and inflation will not slow down.
Keeping the key rate at the same level increases the likelihood of its additional growth in 2025, warned Andrei Barkhota. According to him, the rate ceiling in this cycle is still the level of 25%. Further tightening may occur in a negative scenario - if there is a sharp devaluation of the ruble, and price growth accelerates to over 10%.
Risks to the economy from a high key rate
The market has already reacted positively to the retention of the key rate - the MosBirch index exceeded 2500 points. However, its participants still note the increased probability of bond defaults on the background of a high key rate. As the Central Bank's policy tightens, the risks may increase further.
The main risk of high key rate lies on the category of issuers with moderate risk of creditworthiness (with rating "ruBBB+" - "ruB-"), said Mikhail Nikonov, Director for Corporate Ratings of Expert RA. Yields on them now reach 39% - for borrowed companies the revaluation of their debt taking into account the growth of the key rate will put into question the very possibility of its servicing.
The "red" zone includes companies with high debt load and small assets - these indicators can be seen in their reports, said analyst of FG Finam Nikita Borodanov. As a rule, small companies have a lower level of corporate governance. In order to minimize risks, it is not worth considering issuers with credit ratings lower than A- (moderately high creditworthiness).
Due to the fact that Russia has maintained a record high key rate for so long, problems with bond payments may arise in industries that are most sensitive to the level of interest rates in the economy, said Egor Diashov, Chairman of the Financial Markets Commission of Opora Rossii. This applies to the construction and automotive industries - because of too expensive mortgages and car loans, demand for their products may fall, and the risks of default on bonds may increase.
- A good balance of risks and potential profitability remains in the companies of raw materials industry and electric power sector, banks and insurance companies, IT-sector issuers,- Egor Diashov added.
The construction sector causes anxiety. Largely due to the sensitivity of developers to the rate dynamics (because of the need for "long" financing), it will probably still be necessary to introduce a moratorium on their bankruptcy in 2025 - even despite the preservation of the key rate, said Kirill Kulakov, President of the Regional Association of Appraisers. However, additional support for this market may be provided by the abolition of limits on preferential mortgages, which was announced the day before by the President.
