Rus­sia in ‘near-zero’ funk as calls for eas­ing per­sist

The Pak Banker - - FRONT PAGE -

MOSCOW: Top Rus­sian of­fi­cials are con­tin­u­ing to dwell on the prospects of in­ter­est-rate cuts, un­de­terred by the cen­tral bank's stance that it's putting the brakes on mone­tary eas­ing for longer. While a de­cline in gross do­mes­tic prod­uct has been over for nine months, its growth re­mains "near zero," Econ­omy Min­is­ter Alexei Ulyukayev said in Moscow today. An­nual in­fla­tion may end the year be­low 8 per­cent, and that af­fords a "sub­stan­tial op­por­tu­nity" to re­duce the bench­mark and lower costs for the fi­nal bor­rower, he said. Ef­forts to con­tain the bud­get deficit will cre­ate more open­ings for the Bank of Rus­sia to ease pol­icy, Finance Min­is­ter An­ton Silu­anov said at the same event.

A sec­ond year of re­ces­sion and gains in oil and the cur­rency haven't yet tipped the bal­ance in fa­vor of mone­tary eas­ing be­cause in­fla­tion ex­pec­ta­tions re­main stub­bornly high while un­cer­tainty con­tin­ues to roil com­mod­ity mar­kets. The cen­tral bank kept its key rate at at 11 per­cent last week for a fifth meet­ing and warned that its "mod­er­ately tight" pol­icy may last longer than pre­vi­ously planned.

Rates "will fall with a de­crease in in­fla­tion and in­fla­tion risks," Bank of Rus­sia Gover­nor Elvira Nabi­ul­lina said at the con­fer­ence. Even with the bench­mark on hold, longer mar­ket rates have de­creased, "which speaks to greater con­fi­dence of eco­nomic agents that in­fla­tion will de­cline as a re­sult of our pol­icy."

Ulyukayev de­clined to say how fast the key rate may be cut or pre­dict the bench­mark's level at year-end, say­ing the cen­tral bank is alone in set­ting pol­icy.

With crude prices hav­ing par­tially re­cov­ered af­ter dip­ping be­low $30 a bar­rel this year, the ru­ble has also ad­vanced from Jan­uary's all-time low. It re­treated for a sec­ond day on Thurs­day as oil fell, trad­ing 0.8 per­cent weaker at 69.3 against the dol­lar and ex­tend­ing Wed­nes­day's 1.8 per­cent de­cline -- the sharpest slide in a month. Five-year gov­ern­ment notes fell, push­ing the yield eight ba­sis points higher to 9.32 per­cent.

The Bank of Rus­sia's base­line sce­nario as­sumes Rus­sia's main ex­port blend Urals will av­er­age $30 in 2016, ris­ing grad­u­ally to $40 by 2018. Ulyukayev said this year's bud­get amend­ments will be based on an av­er­age price of $40 a bar­rel.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.