Up to 6.75% per annum: the Central Bank raised its key rate for the fifth time in a row

On Friday, September 10, the Board of Directors of the Bank of Russia raised the key rate by 0.25 percentage points to 6.75% per annum.

The value was the highest since October 2019.

The leadership of the Central Bank explained its decision by the need to curb the rise in consumer prices.

So, to date, inflation in the country is developing above the regulator's forecasts, the Central Bank stressed.

“In August, monthly seasonally adjusted consumer price growth rebounded after a slowdown in July.

Annual inflation increased to 6.68% (after 6.46% in July) and, as of September 6, amounted to 6.74%, ”the Central Bank said in a press release.

As explained in the Central Bank, consumer demand in Russia is growing steadily, and enterprises in a number of industries do not yet have time to increase the supply of goods and services to the required level.

In these conditions, it becomes easier for companies to cover production costs by increasing prices for their products.

In addition, additional pressure on business is exerted by the general rise in prices for goods on the world market, the regulator added.

“For more than half a year, inflationary expectations of the population have been close to their maximum values ​​over the past four years.

The price expectations of enterprises remain close to multi-year highs, ”the Central Bank said.

Nevertheless, according to the Central Bank's forecast, annual inflation will begin to slow down in the IV quarter of 2021.

Moreover, due to the monetary policy pursued by the regulator, the growth rate of consumer prices in the country should slow down to 4-4.5% in 2022 and will remain close to 4% in the future, according to the Bank of Russia.

“The increase in the key rate of the Central Bank leads to an increase in interest on deposits, as a result of which the volume of savings increases.

At the same time, interest rates on loans are growing, which reduces consumption.

Thus, demand is cooled, and, accordingly, prices.

In addition, higher rates contribute to the strengthening of the ruble, which reduces the risks of inflation through a weakening of the currency rate, "explained Albert Koroev, an expert from BCS World of Investments, in a conversation with RT.

The next meeting of the Board of Directors of the Central Bank is scheduled for October 22.

At the same time, during their second autumn meeting, the top management of the regulator may again raise the rate, the chairman of the Central Bank Elvira Nabiullina did not rule out.

“We admit the possibility of further increases in the key rate at the next meetings.

The expediency of these increases, as well as the duration of further maintaining the key rate at the achieved level, will depend on the development of the economic situation, inflation dynamics and, to a large extent, on the balance of risks for future inflation, ”Nabiullina said during a press conference.

In addition to the official statements of Elvira Nabiullina, experts again drew attention to the brooch of the Central Bank chairman.

The accessory has traditionally been perceived as a kind of signal from the head of the regulator.

“At today's meeting, the brooch of the head of the Central Bank is a resting leopard.

Last time we saw the same animal in a jump, now it is resting, which we regard as a signal: the Central Bank is not in a hurry, but it can still quickly return to active suppression of inflation and increase the rate more confidently, "said leading analyst of EXANTE Janis in an interview with RT. Kivkulis.

• © Press Service of the Central Bank of the Russian Federation

As Natalya Milchakova, deputy head of the Alpari information and analytical center, suggested in an interview with RT, by the end of 2021, the key rate of the Central Bank will reach 7-7.25% per annum.

In these conditions, the average interest on deposits in the country may rise to 5-6%, the specialist said.

“Average interest rates on loans, except for mortgages, may rise to 10.5-11.5%.

In turn, the mortgage rate may rise to 8%, as its growth will be restrained by the availability of preferential mortgage programs, ”added Milchakova.

For the benefit of the ruble

According to analysts interviewed by RT, financial market participants highly rated the likelihood of a key rate hike at a meeting in September.

So, investors in their actions took into account the decision of the Bank of Russia in advance, so there was no serious reaction from the ruble.

After the announcement of the results of the meeting of the Board of Directors of the Central Bank, the Russian currency strengthened moderately during trading on the Moscow Exchange.

Thus, the dollar rate decreased by 0.4% - to 72.69 rubles, and the euro rate - by 0.3%, to 86.02 rubles.

The official exchange rate of the Central Bank on September 11 was set at 72.76 rubles per dollar and 86.15 rubles per euro.

In the long term, the actions of the Central Bank can support the national currency, experts say.

An increase in the key rate traditionally increases the attractiveness of ruble-denominated assets and, in particular, federal loan bonds (OFZ), which has a positive effect on the dynamics of the Russian currency.

“When the rate rises, the rate of borrowing on government securities also increases, and more foreign investors come to our market.

As a result, this increases the demand for the ruble, which leads to a strengthening of the currency, "Alexander Abramov, head of the laboratory for the analysis of institutions and financial markets at the Institute for Applied Economic Research, RANEPA, explained in a conversation with RT.

According to Natalia Milchakova, by the end of September, the dollar and euro rates will fluctuate in wide ranges - 72-76 and 85.5-89 rubles, respectively. Meanwhile, Janis Kivkulis does not exclude the possibility of a decrease in indicators in the next three months to 70 rubles per dollar and 83.5 rubles per euro.