Published: February 10th, 2017

The Central Bank of Russia decided to keep key rate at 10%. According to the regulator, inflation expectations are falling.

The Bank of Russia kept its key rate at 10%. The Central Bank said that inflation is generally consistent with the forecast, inflation expectations are gradually declining, and the economy is recovering faster than it was expected.

However, the slowdown in prices is partly due to the influence of temporary factors, said the regulator. The decision of the Central Bank was discussed by the Business FM with the stock exchange expert Vladislav Zhukovskiy.

Vladislav Zhukovskiy, a stock exchange expert, economist: "the Central Bank also understands that the freezing of oil and oil production is a temporary phenomenon, largely a political deal, and it is openly anti-market. We see that Iran, Iraq, Libya, Nigeria, Venezuela did not reduce the extraction but even increased it, plus it is growing in the United States. Only Russia and Saudi Arabia reduced the production. However, if we look at oil prices after the jump to $ 57-58 at the end of December again, they are a little bit down, so that there are not any powerfull investment ideas to buy oil there. In the conditions of the weak, growing budget deficit, weak balance and weak trade balance, I think, we will not see rates reducing. We see that the ruble is greatly strengthened at the end of 2016. Of course, a strong ruble automatically influences the prices of imported goods, from which we heavily depend on, and they are growing not so much. Plus, we have the same monetary, tight fiscal and tax policy, that is, in principle the deficit of ruble money supply is supported, it grows slower than inflation, for a two-year horizon if you look. So let's say that inflation is not clamped, but again there is the drop in the standard of living of the population, falling household consumption and falling investments. So, I do not see any joy here".

The next meeting of the Board of Directors of the Bank of Russia on the key rate will be held on March 24. The current rate was set on September 19 last year.

Source: Business Online