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CBR decides to keep its refinancing rate unchanged at 8 percent

July 13, 2013, 0:47 UTC+3

The current decision was made upon the assessment of the inflation risks and prospects for the economic growth

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MOSCOW, July 13 (Itar-Tass) - The Board of Director of the Central Bank of Russia (CBR) had a meeting on Friday, July 12, and made a decision to keep unchanged its refinancing rate, the Central Bank’s Department of External and Public Relations said in its statement.

The Central Bank’s current refinancing rates amounts to 8.25 percent per annum, the document underlined.

The current decision was made upon the assessment of the inflation risks and prospects for the economic growth.

According to the CBR, in June and at the beginning of July, the year-to-year growth of consumer prices continued exceeding the targeted level and amounted to 6.6 percent as of July 8, 2013. The core inflation totalled 5.8 percent in April. The high level of the consumer inflation rate in the period under review was mainly caused by the hike in the food prices and the dynamics of some regulated prices and tariffs.

In addition, the Central Bank’s forecasts that the inflation rates are able to return to the targeted range in the second half of the year owing to the present-day trends of the monetary policy and the absence of negative shocks on the food market.

The ongoing dynamics of major macroeconomic indicators in the period under review points to the maintaining low indices of the Russian economic growth. The May 2013 slowdown in the growth of some indicators was, in a certain extent, connected with the seasonal factor. The labour market’s current status and the crediting dynamics continue playing the role of supporting factors for the domestic market. The Central Bank assesses as rather high the downward risk for the Russian economic growth against the background of the weak investment activity and slow resumption of the external demand.

The Central Bank of Russia will continue monitoring inflation risks and economy cooling risks. While making its decisions, the bank will take into account the inflation targets and the economic growth forecasts.

The Central Bank’s Board of Directors also made a decision pertaining to the introduction of auctions to provide one-year loans secured by non-market assets or guarantees with the minimum floating interest rate at 5.75 percent per annum starting from July 15.

The decision extends the Central Bank’s system of instruments, which is expected to strengthen an efficiency of the interest rate channel of the transmission mechanism of the monetary policy.

The Central Bank’s Board of Directors is expected to convene for its next meeting on August 9, 2013 to consider the most topical aspects of the monetary-and-credit policy.

On Friday, July 12, it was the first meeting of the Board of Directors chaired by the Central Bank’s Chairwoman Elvira Nabiullina, who repeatedly pointed to the need to support economic growth. In the mean time, Nabiullina earlier stated that “she is totally against the ‘fuelling’ of the economic growth through the inflation hike.”

While replying to Itar-Tass question, analytical experts stated that they were confident that the CBR’s rates would remain unchanged, explaining this decision by the ongoing high inflation rate, which reached 6.9 percent in June.

“The Central Bank of Russia decided to keep its rates unchanged due to the ongoing inflation pressure,” Promsvyazbank analytical expert Anton Zakharov told Itar-Tass, commenting on the Central Bank’s decision. In his opinion, if inflation starts decreasing and if Russia’s economy starts restraining, then “the regulator ‘will have the guts’ to make a decision pertaining to the weakening of the credit and monetary policy within its next several meetings.”

“Firstly, in spite of a certain slowdown, June’s inflation remained at rather a high level. Secondly, it was the first meeting with the participation of Nabiullina. Therefore, there was no need to make any decision too quickly,” IFK Solid Senior Analyst Artur Akhmetov told Itar-Tass.

Previously, the Central Bank of Russia changed its refinancing rate in September 2012. Back then the Board of Directors made a decision to raise the indicator by 0.25 points to the current level of 8.25 percent as of September 14, 2012.



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