The refinancing rate of the Central Bank of the Russian Federation in 2019
This parameter for the economy of any civilized country is key and decisive, because too much is tied to it - the countless number of causal relationships that raise the chain as a whole, soberly assessing its state and prospects.
In Russia and in the world, the refinancing rate shows how much annual the Central Bank takes on current loans to credit institutions of the country. And, therefore, they, in turn, are repelled precisely from this parameter, predicting their profitability and building a policy of relationship with customers.
Strictly speaking, the higher this rate is, the more local banks in civilian lending are torn down, and the more expensive it is to borrow external finances to support their business activities for enterprises.
Today, news regarding the refinancing rate burns through the air with an enviable constancy, forcing the public to be nervous, then, on the contrary, to rejoice, blissfully relaxing.What awaits it in the near future in 2019, and what will be the most likely scenario for the development of the elements of the economy associated with this most important characteristic? Let us try to conduct a small, adequate and objective research on this score, as far as possible.
A bit of history and theory to understand the prospects
Initially, this parameter was called the discount rate, then in 2013, they began to pursue an inflation targeting policy to regulate the depreciation of the national currency and the fall in the level of the economy and introduced the concept of a key rate. But, three years later, they began to use a single term to calculate all of this - the “refinancing rate”, but they completely left its essence.
In the nineties, galloping into the abyss economy showed this rate sometimes reaching up to 200%. Then, at the beginning of the two thousandth, its systematic decline gradually began, and from 2006 to 2017, it gradually crawled from 12% to 8th. In the first half of 2018, the value fell by almost a percentage, which allowed the Central Bank to look into the future with much greater optimism, speaking of further prospects for its further reduction.
As for the rest, at the moment, in addition to the above-mentioned principle of building relations between our central financial organization of the country and its other institutions in this sphere, specifically on the application of the refinancing rate, it is worth remembering that in Russia they rely on it in many other important cases. In particular, for example, when calculating the due fines and penalties. In addition, it is used for tax purposes.
What to expect from "tomorrow"?
Earlier, the Central Bank planned each quarter or even more often to revise the value of the refinancing rate downward. As a result, by the beginning of the third economic trimester, it was getting close to 7.25% per annum, but, for the time being, they are still afraid of reducing it by freezing at the same level, at least until the end of July.
They keep horses for the reason that they have finally completed the recalculation of the inflation forecast in connection with the upcoming changes in VAT (as we remember, they are going to raise it a little).
It is expected that this will affect the growth of consumer prices in 2019, the increase of which will significantly exceed the 4% threshold that is normal for the current situation.True, the department assures that prices and inflation will not rise above 4.5% anyway, but, nevertheless, the refinancing rate will have to take into account this slowdown, so its fall slows down temporarily.
Recall that as early as the beginning of 2018, this parameter was 7.75%, then by mid-February it was revised to 7.5%, and in just a month and a half it fell another 0.25%.
Prerequisites for refinancing rate forecasts
The Central Bank of the Russian Federation sees no reason for any sudden transformation of the refinancing rate at the beginning of 2019 and beyond. This is because the short-term growth of inflation in the spring of 2018 as a result of the increase in excise taxes on petroleum products and the rise in prices for them in the domestic market should stop measures to reduce excise taxes in the early summer of this year.
In addition, there is now a natural annual decline in prices for fruit and vegetables, which also contributes to a slowdown in overall inflation. However, if a certain balance is reached on this side, the changed tax policy will contribute to the growth of inflation expectations, and the Central Bank believes that in quantitative terms this will result in about plus one percent.
At the same time, the department assures that this will in no way affect the attractiveness of loans for the population and enterprises, as well as the intensity of depositing deposits and the use of settlement accounts, since the end consumer, in fact, should not even notice fluctuations in interest rates.
At the same time, for banks and credit institutions of the country, a slight increase or freezing of the refinancing rate will not bring unpleasant surprises, since, due to the conservative policy pursued in relation to customers, they will still benefit.
In general, a slight drop in business activity is expected due to the aggregate of all factors, but not so critical as to cause negative growth rates. As for the risks of the volatility of oil and food prices, they will remain moderate, as the wards of Nabiullina assure, and it is possible that in this connection it will be possible to bring the refinancing rate to 6.5-7% next year.
Well, the forecasts are moderately optimistic, which is good news, because for them the chance to come true is clearly higher than the expectations of the Ministry of Finance, which are completely divorced from reality.And I want to believe that no secondary effects from the tax maneuver undertaken by the Government, changes in foreign markets, geopolitical factors and other factors will not prevent them from coming true.