On Friday, October 23, the Board of Directors of the Bank of Russia kept the key rate at 4.25% per annum.

The Central Bank explained this decision by the need to contain the emerging growth in consumer prices.

“The inflationary expectations of the population and enterprises have grown, which is largely due to the exchange rate dynamics.

In the mid-term horizon, disinflationary risks still prevail, but the effect of short-term pro-inflationary factors has increased somewhat, ”the Central Bank said in a press release.

According to the regulator's estimate, in September the annual inflation rate in Russia rose to 3.7% (after 3.6% in August), and by mid-October it reached 3.8%.

At the same time, by the end of the year, the value will be in the range of 3.9-4.2%, the Central Bank predicts.

“By keeping the key rate, the Bank of Russia leaves room for maneuver.

If, in the event of an exacerbation of the pandemic, the situation in the economy deteriorates again, and the rise in consumer prices accelerates sharply, the regulator will have to raise the rate again in order to keep inflation near the target of 4%.

And there is no worse option than to lower the rate, and then immediately raise it.

Therefore, at today's meeting, the Central Bank chose to pause and not change the rate, "Alexey Korenev, an analyst at Finam Group, explained to RT.

Meanwhile, the Bank of Russia itself does not yet expect a worsening of the situation in the economy in the near future.

Thus, the regulator has improved its forecast for a decrease in the country's GDP in 2020 from 4.5-5.5% to 4-5%.

At the same time, according to the Central Bank, already in 2021 the Russian economy will demonstrate recovery growth - by 3-4%, and in 2022-2023 it will grow by 2.5-3.5% and 2-3%, respectively.

“The upcoming fiscal consolidation, the development of the situation with the coronavirus pandemic in Russia and in the world, as well as the nature of the recovery of private demand in the context of possible changes in the behavior of the population and business will have a significant impact on the trajectory of economic growth.

The implemented (earlier -

RT

) key rate cut will continue to support the economy both in the current and next year, "the Central Bank said.

Recall that the last change in the key rate took place on July 24.

Then the Central Bank reduced the rate from 4.5 to 4.25% per annum and explained its decision by the low inflation rate in Russia.

Meanwhile, since the end of summer, the growth of consumer prices in the country began to gradually accelerate.

Against this background, in September the Board of Directors of the Central Bank decided to keep the rate and thereby contain inflationary risks.

The next meeting of the Board of Directors of the Central Bank is scheduled for December 18.

At the same time, already during its first winter meeting, the top management of the Bank of Russia will again consider the feasibility of reducing the rate, the regulator said in a statement.

“Although in the short-term horizon the ratio of pro-inflationary and disinflationary factors may change, in the medium-term horizon, in our estimation, disinflation risks prevail.

Therefore, we still see space for a key rate cut, ”said the head of the Central Bank Elvira Nabiullina during a press conference.

  • Elvira Nabiullina, Chairman of the Central Bank of the Russian Federation

  • RIA News

  • © Press Service of the Bank of Russia

As an expert on the stock market "BCS World of Investments" Albert Koroev told RT, in December the regulator may reduce the rate to 4% per annum.

At the same time, the decision of the Central Bank may have a positive effect on the Russian mortgage market, the expert said.

Traditionally, banks monitor changes in the Central Bank's key rate and, on the basis of decisions made by the regulator, independently determine the level of long-term lending rates, including mortgage rates.

According to the latest data from the Bank of Russia, in August the average rate on housing loans in the country renewed its historical minimum and reached 7.16% per annum.

At the same time, according to Koroev, by the end of the year the value may drop below 7%.

Without further hesitation

Experts interviewed by RT highly appreciated the likelihood of maintaining the Central Bank's key rate at 4.25% per annum.

According to Alexei Korenev, investors in their actions took into account the decision of the Bank of Russia in advance.

Therefore, in the short term, the actions of the regulator will have a neutral effect on the ruble.

After the announcement of the results of the meeting of the Board of Directors of the Central Bank, the Russian currency showed a slight strengthening on the Moscow Exchange.

The US dollar rate decreased by 0.3%, to 76.3 rubles, and the euro rate - by 0.1%, to 90.4 rubles.

The official exchange rate of the Central Bank on October 24 was set at 76.47 rubles per dollar and 90.41 rubles per euro.

According to Alexey Korenev, the tax period is currently having a positive effect on the Russian currency.

At this time, exporting companies traditionally sell foreign currency and buy rubles to pay taxes.

In addition, the actions of the Bank of Russia are still in favor of the ruble.

Recall that in order to stabilize the exchange rate, the regulator began proactive sale of foreign currency in the domestic market in March.

Thus, the Central Bank artificially increases the demand for rubles.

In total, during this time, the volume of currency sales amounted to about 1.33 trillion rubles.

“Recently, the Central Bank has significantly increased the volume of foreign exchange interventions.

If in September the regulator sold currencies for 54 billion rubles, then in October the volume of sales will amount to 127 billion rubles.

That is, the regulator has actually more than doubled its presence in the foreign exchange market, which allows it to smooth out sharp fluctuations, ”Korenev explained.

  • © Vladimir Trefilov / RIA Novosti

According to Alexander Razuvaev, head of the Alpari information and analytical center, by the end of the year, some pressure on the ruble may be exerted by a high volume of external debt payments.

So, in the IV quarter, the expert predicts an increase in demand for foreign currency from business.

"In total, from October to December, the corporate sector has a maturity date on loans of $ 23.3 billion. At the same time, net payments may amount to $ 21.6 billion, which is 31% more than in the IV quarter of 2019," Razuvaev explained.

Meanwhile, one of the key factors for the foreign exchange market will be the results of the US presidential elections scheduled for November 3.

Ksenia Lapshina, an analyst at QBF IC, told RT about this.

“In the last week of October, exchange rate volatility will remain as low as it is now.

The dollar exchange rate will be at the level of 76-78 rubles, and the euro rate will be close to 90 rubles.

In November, currency fluctuations are likely to increase after the US presidential elections, and by the end of autumn the range of the dollar and euro rates may become wider: 75-80 rubles and 88-92 rubles, respectively, "Ksenia Lapshina noted.

At the same time, according to Alexander Razuvaev, the possible victory of Donald Trump in the elections could lead to a decrease in geopolitical and sanctions risks for the Russian economy.

In this case, by the end of the year, the dollar will be able to drop to 70-72 rubles, the expert is sure.