Russian Economy General News: #12

caveat emptor wrote:Rosstat put some numbers out. Industrial numbers look very bad. Most likely, due to broken supply chains and sanctions.
This is one that needs to be tracked closely.
https://rosstat.gov.ru/compendium/document/50801
Some numbers ( all numbers May '21 vs May '22):
Cars: -96.7% (biggest drop - only 3700)
Trucks: -40%
ICE motors: about -60%
Passenger train wagons: -60%
Freight wagons:about -50%
Fiberglass cables: -80%
Appliances: roughly -60%
AC electric motors: -50%
Excavators: -60%
@Garry
This thread might be better suited.

... and here is where a massive rebuilding program for Novorossia starts

Depending on the behaviour of the exchange rates over the next few days, apparently the introduction of the budget rule won't be strictly necessary, given the recent liberation of imports.
Waiting for the June CPI results. Until then, better stay put.

caveat emptor wrote:
There's a good chance that we see deflation on a monthly level. It should provide good opportunity for RCB to cut full percent in July.

One thing remains a mystery to me.
The mortgage loan rate was cut again in Russia, bringing mortgage interest rates to 7-9% if I remember.
That is much lower than the reference base set by the RCB, and suggests that a mortgage market is being subsidized.
Never checked that in detail, so maybe some Russian resident can enlighten me?
Anyway, that rate is de facto the same as mortgage rates in Poland, Czech, Romania, and other non-EURO-driven EU economies, while the price base for immobilities remains much lower in Russia, while the salaries are getting more and more equal. Russia's average salary closing 60k rubles, which is slightly below Poland and above Romania, while the tax burden favors Russians much with lover PIT tax and general cost of living.
That changes so fast, that it is really hard to follow, and the results can be a surprise for one.

Yeah, that still counts as a kind of subsidized market, as the base rates are much higher than that.
Having a loan at the level of inflation is still a zero cost option.

June deflation was recorded for the first time in the history of modern Russia, 08.07.2022.

In June, prices fell by 0.35% compared to May. Deflation following the results of the first month of summer occurred for the first time in the history of modern Russia. Price cuts are temporary reaction to March price explosion, analysts say.

In June, compared with May, consumer prices in Russia fell by 0.35%, Rosstat reported. Prior to this, deflation in June had never been recorded in the history of modern Russia, that is, since 1991. Usually, a seasonal price decrease occurs in July-September, when farmers are harvesting and food supply is growing. In annual terms (June to June last year), inflation was 15.9%. In May, the annual rate was 17.1%.

The main driver of price reduction was the reduction in the price of fruits and vegetables - minus 9.6% per month. Food products as a whole fell in price by 1.2%, and non-food products - by 0.4%. The only category that went up in price was services — plus 0.9%.

https://www.rbc.ru/economics/08/07/2022/62c82e0a9a79474726fc1e99

Given the further strengthening of the ruble today, it's becoming increasingly evident the need to reintroduce the budget rule for in the long term providing for a substantial purse for along with China come to the rescue in those Global South economies subject to IMF lethal prescriptions.

Loan work: banks are waiting for the key to be reduced to 9%, by Julia Eliseeva for Izvestia. 15.07.2022.

Will loans become more affordable and how the rate cut may affect the ruble.

The Bank of Russia will reduce the key rate by 0.5 percentage points, to 9%, at a meeting on July 22, follows from the Izvestia consensus forecast . Analysts from the largest credit institutions explained that in this way the Central Bank will respond to the decline in inflation - in early July, its level dropped to 15.6% year-on-year. They added that the key cut would allow financial institutions to restart lending . The market allowed further reduction of interest rates on loans following the main indicator.

Sign in nine

All 17 analysts from the largest credit institutions polled by Izvestia are expecting a key rate cut at a scheduled meeting of the Board of Directors of the Bank of Russia on July 22 . 12 of them predict a decrease in the indicator to 9%, four more - to 8.5% at once. Alfa-Bank said that they expect either a very slight reduction in the rate, or its maintenance at the current level, but did not specify the numbers.

On February 28, 2022, the Bank of Russia raised the key rate to 20% amid an outflow of Russian funds from bank accounts. Then the Central Bank reduced the indicator four times. On June 10, the rate was lowered to 9.5% - the level at which it was before the start of the Russian special operation in Ukraine.

In favor of further easing of monetary policy are a decrease in inflation, a decline in lending and the need to support a shrinking economy , Mikhail Vasiliev, chief analyst at Sovcombank, explained to Izvestia. He noted that price growth is slowing down faster than the expectations of the Bank of Russia: Rosstat for the first time since 1991 recorded deflation in June. For the week from July 2 to 8, deflation of 0.03% was again observed in the country, Mikhail Vasilyev recalled, specifying that in annual terms the figure fell to 15.6%.

“At the same time, the decline in prices for non-food products also intensified and over the past week was the highest in the current year. Prices for electronics, medicines and building materials are adjusted downward . It is unlikely that this trend will develop significantly. There is a new wave of the pandemic, and the demand for medicines will increase. The ruble exchange rate will also stabilize and will limit the impact on prices,” said Denis Popov, chief analyst at PSB.

Pro-inflationary risks persist , says Natalia Orlova, chief economist at Alfa Bank. She explained that the lack of sufficient labor means that wages will continue to rise, supporting the recovery in consumption levels . In addition, according to her, there is a rapid increase in budget expenditures, which also has an inflationary character . Finally, the restructuring of the logistics of foreign trade currently creates restrictions on the supply of goods, which again carries pro-inflationary risks.

A little more than a week is left before the meeting of the Bank of Russia, most of which falls on the so-called week of silence. In this regard, there is not much space left for signals, and the following picture is being formed from the ones already implemented: the regulator is looking at the current slowdown in prices with caution, linking it to temporary factors ,” said Evgeny Koshelev, director of the market research and strategy office at Rosbank.

Liquidity allows

Today , the situation with liquidity in banks is stabilizing: the inflow of household deposits in April amounted to 1.3 trillion rubles , almost completely offsetting the total outflow in February-March, Roman Chechushkov, head of investment analytics at Renaissance Credit Bank, stated. Accordingly, the need to keep the rate at such a high level has decreased.

The main reason for the reduction in the interest rate from 20% in early April to 9.5% in June is a decrease in lending , which negatively affects the profit from the core operating activities of banks. So, for example, according to data as of June 1, the volume of loans granted in the field of housing lending for the month decreased by 67.7% year-on-year, to 140 billion rubles, Roman Chechushkov emphasized.

In addition, the debt of individuals to banks has been decreasing for the second month in a row : in May, the total loan portfolio decreased by 48 billion rubles (-0.2% against -0.9% in April), Anton Pavlov, Deputy Chairman of the Board of Absolut Bank, estimated. He suggested that in June statistics there will be a slight increase in lending against the backdrop of lower rates, but further economic recovery and support for consumer activity of the population require additional easing of monetary policy.

Following the decrease in the key rate, with a high degree of probability, a decrease in bank rates will follow , Ak Bars Bank noted. Absolut Bank clarified that they are ready to adjust interest on deposits and loans by 0.25–0.5 percentage points. The press services of Russian Standard Bank, PSB, Zenith and Sovcombank told Izvestia that, if necessary, they would adjust the conditions, focusing on market conditions . In anticipation of the decision on the key "Zenith" has already reduced rates on mortgage programs.

In addition to the availability of loans, a decrease in the key rate also acts as a factor in the weakening of the ruble , added Maxim Timoshenko, director of the financial markets operations department at Russian Standard Bank. However, he stressed that in the current realities, this relationship will not fully work, and the exchange rate of the Russian currency will be determined primarily by the country's balance of payments and the degree of currency control measures.

https://iz.ru/1364926/iuliia-eliseeva/rabota-po-zaimu-banki-zhdut-snizheniia-kliuchevoi-do-9

The Russian stock market was predicted to grow three times, by Natalia Belova for Lenta.ru. 15.07.2022.

Based on the dynamics of recovery from the 2008 crisis, the Russian stock market could triple from current levels, which corresponds to a yield of about 50 percent over a three-year horizon. In view of this, the Russians should think about the formation of ruble-denominated portfolios of securities, Vitaly Isakov , an economist and investment director at Otkritie Management Company, said in a conversation with Lenta.ru .

Commenting on reports of parity between the dollar and the euro, former Russian President and Deputy Chairman of the Security Council Dmitry Medvedev called the weakening of the European currency a consequence of anti-Russian sanctions, and also advised Russians to keep money in rubles. He stated this in his Telegram channel. Isakov agreed that, despite the prerequisites for the growth of the dollar and euro against the ruble, it may be more profitable to keep savings in the national currency.

“The exchange rates of the dollar and the euro do have prerequisites for growth against the ruble in the medium term. But it should be clearly understood that the possession of these currencies in a non-cash form carries sanctions risks, the economist warned. “The time of foreign currencies of “unfriendly” countries as a reliable tool for savings is gone.”

The most reliable, as well as potentially profitable, according to the economist, will be the formation of ruble portfolios of securities - bonds and shares, in a ratio determined by the personal financial situation of the investor.

“I think that Russian stocks on the horizon of three years can give a very attractive yield. The recovery of financial results and dividend payments of Russian companies in the next three years, which corresponds to the dynamics of the recovery from the 2008 crisis, and a return to historical average levels of valuation may lead to a tripling of the Russian stock market from current levels, which corresponds to a yield of about 50 percent per annum over a three-year horizon. years," Isakov concluded.

Earlier, the euro exchange rate updated the anti-record, continuing to fall below parity against the dollar. At a minimum, the value of the European currency fell to $0.9952, according to trading data.

https://lenta.ru/news/2022/07/14/rrrost/

Experts predicted a new reduction in the key rate of the Central Bank, by Roman Markelov for Rossiskaya Gazeta. 17.07.2022.

The Bank of Russia at a scheduled meeting of the Board of Directors on Friday will continue to reduce the key rate, analysts say. According to their forecasts, it will fall by at least half a percent - that is, at least to 9% per annum. The continued reduction of the key rate is justified by the low inflation of the last two months, sluggish consumer demand and a slowdown in lending.

At a meeting on June 10, the Bank of Russia lowered the rate to the current 9.5% per annum from 11%. This is its pre-crisis value: it was from 9.5% that the Central Bank sharply raised the rate at the end of February - immediately to 20% per annum. Since then, as the situation with inflation has calmed down, as well as in the foreign exchange and financial markets, the Central Bank has been reducing the key rate with various steps. The fact that at the meeting of the Central Bank on July 22 another decision could be made to reduce the key rate was announced on Saturday by Russian presidential aide Maxim Oreshkin at the Territory of Meanings forum. He did not give specific predictions.

According to Sergey Grishunin, Managing Director of the NRA Rating Service, the Central Bank may lower the rate on Friday to 8.5-9% per annum, with the most likely drop to 9%. But if the Bank of Russia considers the benefit from the rate cut greater than the loss to the economy from the realization of inflationary risks, then the rate will be reduced by 1 percentage point, the expert believes.

Average deposit rates may soon drop significantly - up to 5%

Sluggish consumer demand compared to 2021 speaks in favor of lowering the key rate (despite the fact that then it was also quite low due to covid restrictions), Grishunin points out. One of the main reasons for the decline in consumer demand is the stagnation in lending to individuals, the analyst points out. According to him, the potential for credit recovery is limited by changed time preferences towards savings, declining disposable incomes of citizens and strict standards for obtaining credit. "These factors will also constrain the regulator when deciding on a rate cut step," Grishunin said.

But at the same time, inflation in Russia in May-June 2022 was at near-zero levels, which confirms the potential for a rate cut, the analyst adds. However, here, too, the potential for a rate cut is limited by the presence of dangerous pro-inflationary factors: rising costs for producers and restrictions on the supply side, he notes.

What will happen to the ruble, oil and stock exchange next week

According to the NRA forecast, in the next three months, taking into account the movement of the key mortgage rate (excluding preferential programs), they will be 7.5-9%, and the maximum rates for preferential programs will decrease to 6%. In the car loan segment, rates will range from 9% to 14% for new cars and from 11% to 15% for used cars. For consumer lending (depending on the type of loan), the rates will be from 9.5%. In the segment of corporate lending (excluding support measures) to non-financial organizations, the NRA expects an average level of rates in the range from 7.5% to 11%. Average rates on individual deposits will now range from 6.5% to 8%, and in some cases will be reduced to 5%.

A decrease in the key rate is usually a factor in the weakening of the ruble, but in the current realities, this relationship will not fully work, and the exchange rate of the Russian currency will be determined primarily by the country's balance of payments and the degree of currency control measures, says the director of the financial markets operations department of Russky Bank Standard" Maxim Timoshenko. According to his forecast, the cycle of key rate cuts is likely to continue further. "At the end of this year, we expect the key rate to be at the level of 7.5-8% per annum," Tymoshenko notes.

https://rg.ru/2022/07/17/dengi-chut-deshevle.html

The Ministry of Finance proposed to buy foreign currency for income from the sale of oil at a price of over $60 per barrel, by Dmitry Grinkevich for Vedomosti.ru. 19.07.2022.

The concept of the budget rule updated by the department will allow to weaken the exchange rate by 10–20 rubles.

The Ministry of Finance proposed to modify the budget rule in the following parameters: to focus on the cut-off price of $60/bbl when calculating basic oil and gas revenues. and fix the production volume at the level of 9.5 million barrels per day. A source close to the Cabinet of Ministers told Vedomosti about these details of the ministry's initiative, and a federal official confirmed the information. As previously reported by the media, citing a representative of the ministry, the Ministry of Finance submitted proposals to adjust the mechanism to the government, but the parameters were not disclosed.

The representative of the Ministry of Finance said that the updated design of the budget rules is now being discussed at the government site, but it is too early to talk about specific decisions. Similarly, "Vedomosti" was answered by the press service of the Ministry of Economic Development. A government spokesman left the request unanswered.

The operation of the system of budgetary rules was suspended almost immediately after the introduction of anti-Russian sanctions. Prior to this, the mechanism performed mainly two functions. Firstly, it stabilized budget expenditures at a certain level: during periods of favorable conditions, their growth was limited, but during the decline in oil prices, the amount of spending did not decrease, since they were provided by reserves accumulated from super-incomes - their source was the National Welfare Fund (NWF). The second function of the rule is to influence the ruble exchange rate and increase its predictability. Taxes from the sale of oil at a price higher than the cut-off price were used to buy foreign currency, which kept the ruble from strengthening during periods of commodity market growth. During the worsening market conditions, the foreign assets accumulated in the National Welfare Fund, on the contrary, were sold for rubles.

The Central Bank acted as the agent of the Ministry of Finance for operations within the framework of the budget rule, which also accumulated gold and foreign exchange reserves and could independently, at the expense of its assets, carry out foreign exchange interventions to stabilize the exchange rate. Russian reserves, both of the Ministry of Finance and the Bank of Russia, denominated in the currencies of unfriendly countries, were frozen as a result of sanctions: approximately $300 billion, i.e., about half of all assets, were blocked.

Refused and changed their mind

The budget rule had to be suspended, firstly, in order to use the entire amount of budget oil and gas revenues, and not just the basic ones, to finance expenses, and secondly, because of the objective impossibility due to sanctions to buy foreign currency for additional revenues. When the value of the dollar and the euro soared over 100 rubles after the introduction of the first rounds of sanctions, few people were worried about the rate predictability function that the budget rule had previously performed. But after the ruble moved to a steady strengthening, the authorities started talking about the need to resume foreign exchange interventions.

In an interview with Interfax at the St. Petersburg International Economic Forum ( SPIEF ) in mid-June, First Deputy Prime Minister Andrey Belousov reported on the discussion of the advisability of switching to exchange rate targeting in the face of a re-strengthening ruble. But the Central Bank, commenting on this topic, flatly refused to return to this practice, which was discontinued in 2014.

At the same SPIEF, Finance Minister Anton Siluanov discussed the advisability of resuming the budget rule, but, firstly, only in the relatively distant future of 2025, and secondly, for the most part in the context of its function limiting the growth of expenses. But two weeks later, speaking at the RUIE congress, Siluanov announced his readiness to quickly restore the rule and start buying foreign currency for excess budget revenues.

According to him, the removal of currency restrictions imposed in response to the sanctions did not help to weaken the ruble, and so far it has not been possible to create an outflow of currency and thus weaken the ruble due to the growth of imports. According to the minister, the authorities have only one tool left to influence the exchange rate from the "heavy artillery": "... either the Central Bank or the Ministry of Finance should participate in the market."

Previously, the Ministry of Finance could influence the exchange rate by buying foreign currency as part of the budget rule, but due to sanctions, it lost this opportunity, he recalled. The strengthening of the Russian currency by 1 ruble, according to various estimates, costs the budget 130-200 billion rubles, he added. Siluanov admitted that if the rule is renewed, part of the budget expenditures will have to be abandoned, but its impact on the exchange rate will protect exporters from a decrease in production volumes.

Economic Development Minister Maxim Reshetnikov, in his speech at the congress, did not support the idea of ​​directing part of budget revenues to foreign exchange interventions. Such a decision would have a negative impact on the economy and could only aggravate the situation, he said. Sterilization of part of the income and, accordingly, a reduction in spending by this amount could lead to a deflationary spiral, Reshetnikov said.

Moreover, in his opinion, this would not solve the situation with the exchange rate. “Unfortunately, there is such an excess of foreign currency on the market that we will not be able to reduce budget expenditures so much in conditions when we have an increased need for money in order to stabilize the exchange rate with this additional demand,” Reshetnikov explained then. “If a decision is made to renew the fiscal rule, then interventions should be made only in the currencies of friendly countries. Then the ratio of the ruble to the dollar and the euro will change through cross-rates,” Siluanov said in an interview with Vedomosti.

Previously, according to him, the mechanism of the rule was determined by predictable parameters: a cut-off price of $40/bbl. taking into account its annual indexation by 2% since 2018, as well as a relatively forecasted production of about 10.5 million barrels per day. Now, according to the minister, the situation has changed: there is high volatility in both the first and second parameters. “Therefore, we will propose to focus on the nominal level of ruble oil and gas revenues. It would allow, on the one hand, to ensure a stable, non-decreasing volume of budget expenditures, on the other hand, it would protect them from fluctuations in the external market.
Such a volume can be calculated empirically using three components: the forecast of oil production in Russia, the cost of a barrel of oil, the exchange rate of the ruble,” Siluanov said. According to the main directions of the budget, tax and customs tariff policy of the Ministry of Finance for 2023-2025. (available from Vedomosti), the ministry proposed fixing the basic oil and gas revenues of the budget for the next three years at the same level of 7.5 trillion rubles.

Impact on the ruble

With the parameters of the budget rule proposed by the Ministry of Finance and the price of oil at current levels, the excess budget revenues will amount to 2.5-4.5 trillion rubles. per year, estimated the macro-analyst of Raiffeisenbank JSC Stanislav Murashov. Such a high spread, according to him, is due to the fact that there is no final clarity on how excess profits from the sale of gas, whose share in the total volume of oil and gas revenues is growing, will be calculated, as well as with the generally unpredictable cost of Urals. One way or another, it will be difficult for the market to digest such a significant volume of interventions, since dollar and euro purchases are excluded, he noted. If the market capacity of the currencies of friendly countries is sufficient, then the impact on the ruble will be significant: interventions will weaken the exchange rate against the dollar by 10–20 rubles, the economist believes. The resumption of the fiscal rule is justified not only in the context of the impact on the exchange rate: at least.

The forecast values ​​of budget revenues and expenditures this year and in 2023–2025, which were presented by the Ministry of Finance in the draft main directions, will in any case adapt online to changing external conditions, said a senior researcher at the IPEI Fiscal Policy Research Laboratory RANEPA Alexander Deryugin. If, relatively speaking, from tomorrow the budget rule will be launched in the parameters proposed by the department, then part of the treasury's expenses will most likely have to be abandoned, he suggested.
On the other hand, foreign currency purchases will have a positive impact on the ruble exchange rate, which will partially compensate for the sterilization of excess profits from the economy, Deryugin said. Judging by the preliminary projections, the Ministry of Finance does not include too risky a deficit in the budget for the next years - in the region of 1% of GDP, Deryugin recalled.

The volume of interventions in the amount of $ 20-25 billion per quarter could bring the ruble exchange rate closer to the levels of 70-75 rubles / $ within six months, Denis Popov, chief analyst at PSB, noted earlier in a conversation with Vedomosti. But these are very rough estimates, which can be significantly adjusted depending on the dynamics of oil prices, the speed of recovery of imports and the growth of sanctions pressure, the expert noted.

Basic income, according to the draft main policy directions of the Ministry of Finance, is fixed at the level of 7.5 trillion rubles. for the next three years, said Victor Tunev, Chief Analyst of Ingosstrakh Investments Management Company. Probably, they are calculated just from the price of oil at $60 and the dollar exchange rate expected by the Ministry of Economics at about 77 rubles. But at a rate of 50-60 rubles. oil and gas budget revenues will be lower and there will actually be nothing to buy foreign currency, the economist stated.

Lyubov Romanova participated in the preparation of the article.

https://www.vedomosti.ru/economics/articles/2022/07/18/931917-minfin-zakupat-valyutu

The first Russian ATM is included in the register of domestic equipment, 21.07.2022.

The Ministry of Industry and Trade included the first Russian ATM with a cash recycling function in the register of domestic equipment. The SAGA ATM was developed jointly with the Avtomatika concern (part of Rostec).

"Inclusion in the register of Russian products is a necessary element of participation in public procurement,” explained Vladislav Ovchinsky, head of the Moscow Department of Investment and Industrial Policy. “Such goods receive preferences when competing with foreign products: state buyers are required to purchase domestic goods if they are available.”

The device is assembled mainly from Russian components, runs on domestic software, the software is certified. Part of the foreign components are purchased in countries friendly to Russia, which allows us to service the equipment without failures.

SAGA will be able to produce more than 25,000 ATMs a year, while the needs of the Russian banking industry, according to the Association of Banks of Russia, are about 20,000 units. The start of sales is scheduled for October 2022, the company told Interfax.

https://rg.ru/2022/07/21/pervyj-rossijskij-bankomat-vnesen-v-reestr-otechestvennogo-oborudovaniia.html

The Central Bank of Russia lowered the key rate to 8% per annum, 22.07.2022.

The Board of Directors of the Central Bank of Russia decided to reduce the key rate from 9.5% to 8% per annum.
This is stated on the website of the regulator.

Earlier, the head of the Bank of Russia Elvira Nabiullina noted that the Central Bank will continue to change the rate as inflation falls.

https://russian.rt.com/business/news/1028824-stavka-cb-rossiya

The Central Bank sharply lowered the rate: what will happen to prices, mortgages and the ruble, by Natalia Dembinskaya for RIANovosti. 22.07.2022.

The Bank of Russia lowered its key rate from 9.5% to 8% per annum. The aggressive step of the regulator surprised many - they expected a minus of 0.5 to one percentage point. The Central Bank pointed to the low growth rates of consumer prices and the weakening of inflationary expectations. However, the economic situation remains difficult. How the ruble exchange rate, loans and the mortgage market will change now - in the material of RIA Novosti.

A sharp decline

At the end of February, the Central Bank raised the rate immediately to 20 percent against the backdrop of anti-Russian sanctions and the collapse of the ruble. As the situation stabilized, the rate was reduced - from April.
By June, it reached 9.5 percent, with a further decline forecast. Most analysts predicted a smooth correction. However, at the July meeting, the Central Bank immediately cut off one and a half percentage points.

"The current growth rate of consumer prices remains low, contributing to a further slowdown in annual inflation. <...> Inflationary expectations of the population and businesses have noticeably decreased, reaching the levels of spring 2021. The decline in business activity is slower than the Bank of Russia expected in June,” it says in a statement from the Central Bank. They also stressed that external conditions remain difficult and continue to significantly limit economic activity.

Inflation and demand

The Central Bank's medium-term forecast for annual inflation is 12-15 percent. At the moment it turns out 15-16.

In March-April, prices rose rapidly. And in June they even recorded deflation by 0.35 percent compared to May.
“Moreover, in August-September, deflation will probably increase, because the harvest will go on sale, and the rise in airfare will stop due to a decline in demand - the holiday season will end in August. As a result, assumptions of 12 percent per annum now seem more logical than 17," says Nikolay Pereslavsky, an employee of the Department of Economic and Financial Research at the CMS Institute.

From this point of view, it would be possible to do nothing with the key rate or lower it slightly - by 0.5 percent - and consolidate the result, notes Ksenia Artemyeva, Operations Director of the Fast River fintech platform.

"However, she continues, the regulator is now worried not only about prices. The main task is to stimulate consumer activity and reduce the cost of loans for businesses and the population in order to restart the economy and give impetus to further development. Isolation from global markets means domestic recovery will be slow".

By sharply lowering the rate, the Central Bank is trying to revive the economy, Evgeny Shatov, a partner at Capital Lab, confirms. Credit rates will decrease for both corporations and individuals, stimulating both production and demand.

Cheaper mortgages

The mortgage market in Russia has sunk heavily: loans have become unaffordable. Vladimir Putin instructed to return the growth rate of the mortgage portfolio to last year's level by August, and this is unrealistic without a low rate.

Demand for loans increased already in May, after the March collapse. Then the banks issued 2.5 million loans (20 percent more than in April) totaling 441.5 billion rubles (23 percent more than the previous month). We added all segments, except mortgage.

“Now is a difficult period for large purchases, people are waiting. Most likely, a revival will occur with the improvement of conditions for preferential mortgages, which are being discussed in the government, and when prices will decrease under the pressure of low demand,” Artemyeva believes.

According to Pereslavsky, rates on deposits and loans will decrease by about one and a half percent. "But deviations are inevitable. Banks are ready for more to attract additional customer funds - the most loyal borrowers can be offered eight percent per annum - at least on a mortgage," he clarifies.

Ruble's exchange rate

Another reason that prompted the regulator to take such a radical decision, analysts call the overly strengthened ruble. This reduces the cost of imported goods and slows down inflation, but at the same time hurts exporters' revenues.

“Unfavorable for the budget: a third of its income is generated by oil and gas revenues, and the average annual dollar exchange rate is set at 72 rubles. Cheaper loans are a step towards weakening the national currency,” Artemyeva explains.

According to experts, the optimal range, previously designated by the government, is 70-80 rubles per dollar. This is in the interests of business, the budget, and citizens.

Analysts suggest that the weakening will begin in the autumn, and by the end of the year the dollar will rise to 70 rubles. Besides activation of parallel import will affect. On the other hand, the Central Bank warned about the risks of a global recession: this would further reduce external demand for Russian exports.

https://ria.ru/20220722/stavka-1804350309.html