Russia's Central Bank expects that the key rate will stabilize at 6% after reaching this level in 2019, the deputy director of the Monetary Policy Department of Russia's Central Bank Andrey Lipin said, speaking at the forum of the Financial University.
He noted that this indicator can be approached if next year no sharp negative force majeure circumstances happen.
"We will be at this level: it can decline below 6% temporarily, or rise above 6% temporarily. But we should expect 6%," TASS cited the deputy director of the Monetary Policy Department of Russia's Central Bank as saying.
Lipin also noted that a sharp decline in the key rate will not lead to a reduction in ultimate economic rates, so the Central Bank will reduce it smoothly. The ultimate goal is to fix inflation at 4% and a key rate at 6%, which will allow the effective economic development, he explained.
The current key rate is 8.25% per annum. The Bank of Russia board of directors will hold its next rate review meeting on December 15, 2017.
The advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, speaking with Vestnik Kavkaza, noted that despite this year's ultra-low inflation, the Central Bank cannot cut the key rate to 6% now. "One of the high rate functions, in addition to fighting inflation, is to maintain the ruble exchange rate and create interest in Russian debt instruments. From this point of view, any sudden movements of the rate may destabilize the financial system, so the Central Bank is likely to take a wait-and-see attitude, so it's unlikely that we may see a rate of 6% earlier than in a year or two," he predicts.
In this case, Sergei Hestanov expects that the business will be neutral towards the rate reduction to this level. "At present, most of the business is not interested in attracting financing. So any changes in the Central Bank's rate will have almost no effect on business activity," the advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house explained.
The expert drew attention to the fact that the Central Bank does not intend to use the key rate as an instrument of emergency regulation beyond crisis situations.
The associate professor of the department of finance, money circulation and credit of RANEPA, Maxim Safonov, in turn, also noted the low impact of the key rate at current levels on the economy. "Inflation is just one of many indicators which should be considered. Yes, the rate affects prices in stores, wages, but it is not the main determining cause," he said.
At the same time, according to Maxim Safonov, the Central Bank's financial policy stops it from the rate cut. "The position of the Central Bank does not always coincide with the position of the Ministry of Finance, as each of the agencies has its own goals. In fact, nothing prevents i from cutting the rate, except for the difference in goals and tasks facing the two agencies. The intention to cut the rate to 6% should be perceived as a positive phenomenon, but the Central Bank's further policy is a riddle wrapped up in an enigma," the associate professor of the department of finance, money circulation and credit of RANEPA summed up.
