March 26, 2023

Head of the Central Bank of the Russian Federation Elvira Nabiullina.

Photo: Vladimir VELENGURIN

Stability. This is approximately how it is possible to characterize the monetary policy of the Central Bank in the last six months. This Friday, the rate was left at the same level again: 7.5% per year. The Central Bank considered that there were still no reasons to change it. The risks of accelerating inflation remain high. Therefore, the Central Bank does not want to lower the rate any further. However, there is no reason to raise it either. Bye bye. These are the main issues discussed at the next press conference of the head of the Central Bank.


Many factors influence the rise in prices. They must be taken into account as a whole. For example, the ruble exchange rate affects inflation. If it falls, then imports become more expensive. Our export products are getting cheaper now. This leads to a weakening of the currency.

“In general, risks remain biased towards pro-inflationary ones, which is why we continue to believe that the probability of a rate increase this year outweighs the probability of its reduction,” said Elvira Nabiullina.

Another factor taken into account by the Central Bank is the behavior of consumers. In recent months, it has been saving. I mean, most of us would rather save money than spend it. In general, this behavior has been preserved. But there are signs that many are tired of saving.

– Until now, people are still guided by the precautionary motive, which appeared against a background of increasing uncertainty last year. They continue to form an airbag that allows them to feel more secure. As the general uncertainty decreases and a certain comfortable level of savings is reached, the motivation to accumulate an additional reserve of funds may decrease, considers the head of the Central Bank.

A positive sign is inflationary expectations. They decreased to 10.7% per year. This means that the majority of respondents believe that this is the rate at which prices will rise next year. By way of comparison, during the last six months these expectations were at the level of 12% per year.

The building of the Bank of Russia in Moscow.



Another important factor that affects inflation is budget spending. They have increased quite dramatically. In addition, the deficit has grown. Only in the first two months it exceeded 2.6 trillion rubles. Although the Ministry of Finance planned for the whole year that there would be a little more – about 3 trillion rubles. This gives rise to rumors that the state has turned on the printing press. For example, to cover this shortfall, we started printing money. The Central Bank denies it.

– In the jargon of central banks, economists often refer to the issuance of money as the financing of unlimited issues of a state or a company by the Central Bank, and such behavior inevitably leads to an increase in inflation. If you do not set such limits on the growth of the money supply, prices will rise without limit. We do not do this, – explained Elvira Nabiullina.

In other words, unsecured financing leads to accelerating inflation. When money is printed like this. Or practically so. For example, in the same States, quasi-credit has been used for many years. The US Federal Reserve, so to speak, lent to the Treasury. And he has already used the money to cover the budget deficit. The tool is debatable. It appears that it was not only printed, but given on credit. And this debt must be paid sooner or later. But in fact, this is unlikely to ever happen.

In Russia, this is not yet used. Yes, the Ministry of Finance issues government bonds. He sells them in the financial market. Banks are buyers. But in this case market mechanisms apply. The demand is regulated by the tariff. If the Ministry of Finance offers a good offer (for example, recent issuances were at 10-11% per year, which is one and a half times higher than the key rate and double the inflation forecast for the next few years), then banks buy these securities. If you offer an unfavorable rate, no one will buy these government bonds.


By the way, to talk about the same States. Nabiullina could not ignore the issue of the banking crisis in the United States. There, several banks immediately ordered to live long. And the government had to literally save them and spend a fabulous amount on this – more than $ 300 billion. And it is difficult to predict how events will develop. Many experts predict very serious consequences.

– There is no direct impact on the Russian financial system, but this factor itself adds uncertainty about the future trajectory of the global economy. In combination, this situation may increase the risks of a recession in the global economy, despite the strong data we have seen recently. For Russia, a slowdown in the global economy means a decrease in demand for our export products, which may exert additional pro-inflationary pressure, – explained Elvira Nabiullina.

The danger of such an attempt to save the US banking sector, like flooding all problems with money, is as follows. If the US authorities start allocating money to all the banks that are experiencing problems, this could trigger an inflationary spiral in the US. The bank went down, money was allocated, inflation increased, the rate had to be raised, the banks still had to more problems, the next players fell, they were given money again, etc.

– Here, of course, one of the most important lessons is that the basic things – a balanced monetary policy and a balanced financial stability policy – prevent the occurrence of such systemic problems. They must be followed in any case, – the head of the Russian Central Bank gave advice to foreign financiers.


Speaking of balanced politics. The Central Bank adheres to this logic in all supervised areas. For example, the regulator is very concerned about the work of developers. Yes, they are having a bad time. They need to somehow attract customers. But in the pursuit of profit today, they can create serious problems in the industry. The Central Bank continues to fight against zero mortgages and the “devils know what schemes” developers use to attract customers.

– We are absolutely not satisfied with these schemes. And we not only monitor this system, but are also ready to make a decision on it. We see, first, that the share of potentially riskier loans is growing. First, with a low down payment. Second, the proportion of loans that go to people who need to pay 80% of their income to repay the loan has increased. This is also a potentially very risky system,” explained Nabiullina.

The Central Bank cannot completely prohibit the issuance of such loans. But you can influence market participants so that such a mortgage is unprofitable for them. In particular, the Central Bank is gradually increasing the requirements for this type of loan. The next adjustment is scheduled for May 1 of this year. The essence of the restrictions is that for every ruble issued under such a risky mortgage, the bank will have to set aside a large amount in reserves. And this reduces the profitability of this instrument. After all, money sitting in reserves does not generate income. And if these “arguments” do not affect banks and developers, the Central Bank is ready to lobby for legislative restrictions.

– All these schemes are ultimately paid by people from their wallets. Of course, we will fight against these schemes. And I already said it and I say it again: if they multiply, we will very persistently go to the Duma and propose a decision according to which such mortgage programs are possible only within the framework of strictly described laws. So that there are no deviations. Since all these deviations do not benefit borrowers, in many respects these are unfair sales, when borrowers are simply deceived, – explained the head of the Central Bank.


By the way, the Central Bank plans to defend the rights of bank customers on another level. They propose to increase the maximum amount that a person can transfer from their account at one bank to their account at another bank. Now, under the Fast Payment System (FPS), this amount is limited. Without commissions, you can transfer only 100 thousand rubles per month. The Central Bank proposes to increase this amount to 1.4 million rubles.

– Our position here has not changed. We understand that some banks are against it, but we consider it of fundamental importance that people have the right to freely transfer their savings from one bank to another bank, at least within the insured amount, – explained Elvira Nabiullina.

In his opinion, this will increase competition between banks. If it is possible to transfer money from one market participant to another without commissions, this will increase the deposit rates. Banks will start fighting more for customers. These options are currently limited. Even if the rates in your bank are lower than in another, and the amount on the account is more than 100 thousand rubles, many people decide that the game is not worth it and leave the money on a less profitable deposit. And you could earn more.

The largest Russian banks oppose the initiative of the Central Bank. One of the arguments is that the banks will then lose part of their fee income. After all, a person will be able to transfer large amounts without commission not only to himself, but also to other people. For example, you’ll first transfer to her account and then send it to someone else within another bank (they generally don’t charge fees for intrabank transfers).

Compromise options are being discussed now. For example, an increase in the amount of the transfer without commission up to 300 thousand or 600 thousand rubles.


These amounts are pennies compared to what the West has frozen in its banks. We are talking about our foreign exchange reserves. According to rough estimates, we are now unable to access the previously accumulated $300 billion, but local regulators allegedly cannot find it in full. At least, that’s the opinion of a Bloomberg reporter, who asked this question and wondered if we could hide them very well.

– I can’t help here, – smiling modestly, answered the head of the Central Bank.

Money, as they say, loves silence. Especially now.

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