Excessively high lending rates have a restraining influence on the development of the Russian economy, the Deputy Prime Minister of Russia, Olga Golodets, said.
"Probably, today it is difficult to find any man who would not have talked about the need to reduce interest rates for both business and consumer loans. Today, it was actually a general line in the discussion of many issues, because the economy isn't working, such an interest rate is seriously hampering the development of the economy and consumption," RIA Novosti cited her as saying.
Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, recalled in an interview with a correspondent of Vestnik Kavkaza that Olga Golodets is "the Deputy Prime Minister for Social Policy". "And I completely agree with her that interest rates on mortgage loans can be lowered for the population. It is reasonable, as I think that encouraging citizens to construct housing and increasing the birthrate is the number one task for the government," he said.
"But if we consider our economy and the reduction in the rate in general, the Board of Directors of the Russian Central Bank considered the possibility of lowering the key rate at the last meeting and it has decided that Russia's economy is not stable enough to reduce the key rate, despite stabilization on financial and commodities markets. I think that the Board of Directors will cut its key interest rate by 0.25-0.5% at the next meeting. We shouldn't hurry in the current volatile environment," the expert added.
Commenting on the actions of banks, he expressed the opinion that they "pursue some strange policy". "Banks could simply reduce this percentage to 15-20%. But banks extract excess profits because of their monopoly position in the market. People have no other way to acquire available financial resources and the banks raise rates," the economist believes.
"I understand that banking is a business, but business must somehow be regulated by the state. After all, I believe that interest rates are too high, especially for the population. The government can apply declarative straight rates on mortgage loans and make state-owned banks finance these programs aimed at the development of people and the state," Yuri Yudenkov concluded.
The head of the department of stock markets and financial engineering of the Faculty of Finance and the Banking Business of RANEPA, Konstantin Korischenko, in his turn, noted that now "all banks build their credit and deposit rate equal to the rate of the Central Bank." "And it doesn't reduce it, explaining that inflationary risks are still high today. On the other hand, high rates is an obstacle to economic growth and overall development of the economy," he said.
The experts agreed that it is necessary to reduce lending rates to ensure economic growth. "The lower cost of consumer loans means that consumption increases. Accordingly, the manufacturer begins to produce more goods and the economy grows," Konstantin Korischenko explained.
The head of the department of Economics and Finance at the Faculty of Economics and Social Sciences of RANEPA, doctor of economic sciences, Professor Alla Dvoretskaya, noted that "loans are virtually inaccessible for small and medium-sized enterprises, because rates are high for them and very different from the rate of inflation." "Therefore, if inflation will be reduced, they need to reduce the rate as well. We have the rate of 11%, while inflation is planned to be at 7-8%," she said.
"Of course, high rates are beneficial to them, but still no one takes loans at such high interest rates. So it is necessary to reduce the key rate and then banks will reduce their rates too. Business is waiting for lower rates, their absence hinders the economy. Therefore, if the fight against inflation will be successful, it becomes a basis to reduce the rate. Now the process of reduction is mainly inhibited by high inflation. Monopolies, the lack of competition – all this leads to high inflation. And it requires efforts of both the Central bank, other banks and enterprises," the expert added.
This also applies to consumer loans. "In general, they are very expensive, because the risks are high. After all, banks keep high rates because they also consider a high risk of not being paid for a loan. A large number of citizens have 3-4 credits and they don't pay on time. And trustworthy clients overpay for others, " Alla Dvoretskaya summarized.
