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Russian Central Bank may add crisis scenario in monetary policy

The basic monetary policy scenario envisages the Urals oil price rising to $104.8 per barrel from around $95 per barrel now

MOSCOW, September 25. /ITAR-TASS/. Russia’s Сentral bank may include a crisis scenario of slumping oil prices into its monetary policy draft until 2017, Chairwoman Elvira Nabiullina said Thursday while presenting the draft to the government.

“We are currently working out an additional fourth stress scenario, which implies a rapid, more significant decrease in oil prices during the forecast. We consider the possibility of including the scenario into the draft at the next stage of development the main guideline,” Nabiullina said.

Previously, she said the draft includes three macroeconomic scenarios, none of which accounts for a rapid decrease in oil prices.

The basic monetary policy scenario envisages the Urals oil price rising to $104.8 per barrel from around $95 per barrel now, which is lower than in any of the three monetary policy scenarios.

Nabiullina also said the bank doubts that lowering its key rate to 4-6% will result in banks cutting their credit rates for companies, while the Central Bank cannot directly regulate them and force the banks to “give cheap credits to borrowers”.

In 2014, the regulator increased its key rate three times, the last time on July 28, when the key rate was increased to 8% from 7.5%. The banks simultaneously raised their rates to transfer the increasing costs of borrowings to their clients.

The Central Bank can change the parameters of the program for refinancing loans taken for investment projects if needed, Nabiullina said, adding that the Central Bank will use the refinancing instruments under any scenario to “stimulate some sectors of the credit market, the development of which is restrained by structural factors.