US sanctions spoil Russia's most important achievement
According to the Central Bank, the introduction of new US sanctions against Russia may affect the Russian the economy seriously enough. The regulator assumes that inflation can significantly increase as a result of them. In this case, you have to completely adjust the monetary policieswhich has been carried out in recent years.
These sanctions already had negative consequences for the Russian economy: such as “Black Monday”: a collapse on the stock exchange and a drop in the ruble exchange rate against leading world currencies. The main reason for the collapse is the outflow of foreign capital from Russian assets. Foreigners were afraid of Washington’s possible ban on the Russian state debt, as well as on federal loan bonds (it was on them that foreigners managed to make good money earlier).
However, by the end of last week there were positive trends. The fall of the markets was replaced by their recovery. The fall of the ruble slowed down - the Russian currency managed to recover by half after the fall. But from the USA threats of new anti-Russian sanctions come. Under these conditions, the Central Bank can greatly change its plans.
So, until April, many experts predicted that the key rate will decrease and will reach 6% at the end of the year (now it is at 7,25%), and inflation will not exceed 2,4%. Incidentally, low inflation (up to 4% per year) was considered one of the main achievements of the Russian economy. The authorities tried for many years to achieve this. Russian President Vladimir Putin and other government officials have repeatedly stated that reducing inflation is of great importance to the economy as a whole.
At the same time, the inflation rate is closely connected with the key rate of the Central Bank. However, after the introduction of sanctions, the regulator does not exclude that the rate will be increased.
For its part, the Ministry of Economic Development believes that US sanctions can significantly affect the economic situation only if the negative in the financial markets is long-term.
According to Natalya Milchakova, deputy director of Alpari’s analytical department, the policy of the Bank of Russia is likely to be changed not so much by the sanctions themselves, but by their consequences - above all, rising inflation and a drop in the ruble.
She believes.
Thus, in order to cope with a possible devaluation of the Russian currency, the Central Bank will have to raise the rate (although it was previously assumed that it would decrease). So, in 2014, in order to withstand the rapid depreciation of the ruble, the rate was increased from 6,5% to 17%.
But then there was another extremely negative factor that had the strongest effect on the economy. Namely, the price of oil fell sharply. Currently, oil is quite expensive. The cost of a barrel of Brent exceeds 71 dollars. This may deter the economy from a serious crisis.
If the key rate is increased, this will lead to a decrease in currency speculation and will help keep inflation in check. As a result, Milchakova believes, one can expect a short-term increase in the ruble against the US and European currencies.
At the same time, interest rates will rise, and one of the incentives for growth will disappear in production. And so at present, Russian loan rates are among the highest. Milchakova believes that under a negative scenario, GDP growth will slow down - it will not exceed 0,5–1%. “There will be stagnation,” the expert concluded.
Another expert, Georgy Vashchenko, head of operations on the Russian stock market of IC Freedom Finance, said that if the rate rises by one percentage point, this will lead to higher inflation and a slowdown in economic growth to 0,5%.
As for the Central Bank, it is not inclined to believe in the repetition of the 2014 crisis. But this crisis is remembered by many citizens - then it caused a stir in exchange offices, a massive purchase of household equipment and electronics in stores, lower salaries amid a sharp increase in prices.
As stated by Russian Foreign Minister Sergei Lavrov, the United States threatens the people of Russia. It is a lie that some American politicians claim that sanctions are directed only against the oligarchs, as well as the military and politicians who supposedly destabilize the world.
–Lavrov expressed optimism.
These sanctions already had negative consequences for the Russian economy: such as “Black Monday”: a collapse on the stock exchange and a drop in the ruble exchange rate against leading world currencies. The main reason for the collapse is the outflow of foreign capital from Russian assets. Foreigners were afraid of Washington’s possible ban on the Russian state debt, as well as on federal loan bonds (it was on them that foreigners managed to make good money earlier).
However, by the end of last week there were positive trends. The fall of the markets was replaced by their recovery. The fall of the ruble slowed down - the Russian currency managed to recover by half after the fall. But from the USA threats of new anti-Russian sanctions come. Under these conditions, the Central Bank can greatly change its plans.
So, until April, many experts predicted that the key rate will decrease and will reach 6% at the end of the year (now it is at 7,25%), and inflation will not exceed 2,4%. Incidentally, low inflation (up to 4% per year) was considered one of the main achievements of the Russian economy. The authorities tried for many years to achieve this. Russian President Vladimir Putin and other government officials have repeatedly stated that reducing inflation is of great importance to the economy as a whole.
At the same time, the inflation rate is closely connected with the key rate of the Central Bank. However, after the introduction of sanctions, the regulator does not exclude that the rate will be increased.
For its part, the Ministry of Economic Development believes that US sanctions can significantly affect the economic situation only if the negative in the financial markets is long-term.
According to Natalya Milchakova, deputy director of Alpari’s analytical department, the policy of the Bank of Russia is likely to be changed not so much by the sanctions themselves, but by their consequences - above all, rising inflation and a drop in the ruble.
If the dollar soars to 70 rubles and does not fall, and the annual inflation rate rises above 4%, the Central Bank will tighten its monetary policy
She believes.
Thus, in order to cope with a possible devaluation of the Russian currency, the Central Bank will have to raise the rate (although it was previously assumed that it would decrease). So, in 2014, in order to withstand the rapid depreciation of the ruble, the rate was increased from 6,5% to 17%.
But then there was another extremely negative factor that had the strongest effect on the economy. Namely, the price of oil fell sharply. Currently, oil is quite expensive. The cost of a barrel of Brent exceeds 71 dollars. This may deter the economy from a serious crisis.
If the key rate is increased, this will lead to a decrease in currency speculation and will help keep inflation in check. As a result, Milchakova believes, one can expect a short-term increase in the ruble against the US and European currencies.
At the same time, interest rates will rise, and one of the incentives for growth will disappear in production. And so at present, Russian loan rates are among the highest. Milchakova believes that under a negative scenario, GDP growth will slow down - it will not exceed 0,5–1%. “There will be stagnation,” the expert concluded.
Another expert, Georgy Vashchenko, head of operations on the Russian stock market of IC Freedom Finance, said that if the rate rises by one percentage point, this will lead to higher inflation and a slowdown in economic growth to 0,5%.
As for the Central Bank, it is not inclined to believe in the repetition of the 2014 crisis. But this crisis is remembered by many citizens - then it caused a stir in exchange offices, a massive purchase of household equipment and electronics in stores, lower salaries amid a sharp increase in prices.
As stated by Russian Foreign Minister Sergei Lavrov, the United States threatens the people of Russia. It is a lie that some American politicians claim that sanctions are directed only against the oligarchs, as well as the military and politicians who supposedly destabilize the world.
Don't worry we can stand it
–Lavrov expressed optimism.
Information