Sergei Ignatyev raise refinancing

Sergei Ignatyev raise refinancing

The head of the Central Bank Sergei Ignatyev will not even look towards colleagues from the USA Ben Bernanke, reduce rates

For the first time in the past ten years, the Bank of Russia raised the refinancing bid: from 4 February, it rose by 0.25% to 10.25%. Meanwhile, the Central Bank has changed the parameters of other rates, including rates on the auction repo, banks long ago called "untouchable", and part of tightened regulations reservation, including foreign loans. The actions of the Central Bank economists call "cosmetic" and not expect them says the claimed effect. However, probably, the Central Bank focused on other effects, including the political one. The growth rates showed investors that the head of the Central Bank Sergei Ignatyev support Vice-Premier Alexei Kudrin, in the fight to Russia as "an island of stability in the world financial crisis".

From today, the Bank of Russia increased to 0.25%, interest rates on all transactions relating to the provision of liquidity to commercial banks, as well as increased rates on deposits in the Central Bank. Moreover, grew reserve requirements: banks would have to deposit in the Central Bank greater than before, the proportion of its obligations to creditors and depositors. Decision chapter TSB Sergei Ignatieva raise it became very surprising for markets. In August 2007 central biggest economies the world except China, the rates lowered. Central Bank refinancing rate increased for the first time in almost a decade: June 29, 1998, it was increased from 60 to 80% per year and has since fallen to the last 10% of the value. At this level, it was established on June 19, 2007.

However, some other actions TSB balanced decisions. Since February 4, the so-called rate increase averaging to calculate the value of mandatory reserves. This would partly offset the removal of the banking system liquidity and the increasing cost of money. Previously, banks could at the daily repo auctions direct loan from the Central Bank of slightly more than 6% per annum, but now the same one-day loan would cost them a minimum of 6.25%.

The latter may be the most serious of decisions taken by the Central Bank. "So far repo rate was untouchable - Mikhail Galkin said of MDM Bank .- It is the tool - a key channel refinancing Russian banks in the Central Bank". He pointed out that this rate has not changed for more than four years, and compares the value of its federal funds rate by the Federal Reserve System. MDM was the only major bank, which analysts spoke of the growing likelihood of raising the key rate.

First зампред Bank of Russia Alexei Ulyukayev, "commenting agency Prime-Tass on Friday" by the decision of the board TSB, explained that the Central Bank believes control inflation its primary task and, accordingly, decides to implement it. According to him, if in the past years to combat inflation, the Central Bank used the ruble, it was now "objectively transmission mechanism, the role of interest rates". Mr. Ulyukayev expects that these measures will sterilizer effect by deleting part of the liquidity from the market, and in addition to that will reduce the rate of growth of money supply. MDM Bank representative suggested that the action Friday TSB "will lead to sales in ruble bonds, especially in the quality of release, which are sensitive to the Central Bank repo rate".

Most of the interviewees' "" Economists say that the changes are "cosmetic" serious and immediate impact on the market will fall. They call them "show of force", saying that this is "probably a signal of the seriousness of intentions to fight inflation than the actual mechanism to deal with the problem."

"If we just raised the standards of reservation, it would mean removal of liquidity from banks by about 77 billion rubles. Increasing returns averaging coefficient them about 55 billion rubles of liquidity, that is, the common saldirovannoe exemption will be 22 billion rubles, "- himself Alexei Ulyukayev said. Estimates of economists investbankov slightly higher - from 50-80 billion roubles (Anton Struchenevsky, "Troika Dialog"; Alexei Moiseyev, "Renaissance Capital") to 100 billion roubles (Yaroslav Lisovolik and Irina Lebedeva, Deutsche Bank).

Even the highest of these estimates is not meant dramatic seizure of liquidity - on Friday the value of the deposits in the Central Bank and korschetah exceeded 800 billion rubles. Analysts are uncertain and that the decisions could be seriously reduced the rate of growth of money supply (M2 aggregate): it has risen in 2007 by 48% to 13.27 trillion rubles.

In the Ministry of Finance, whose head Alexei Kudrin recently once again stressed that the Government and the Central Bank will use all means to fight inflation, comments from the formal surrender did not, although insightful commentary from the Bank of Russia avoided action. Director of the department of financial policy Ministry of Finance Alexei Savatyugin said " '": "Decisions of the Central Bank alone and takes from the government pursues an independent monetary policy." Meanwhile, in banking circles surprised by the Central Bank policies. Decision on the adoption of a package of orders says the growth rate has been adopted by the day after the closed meeting in Moscow boarding house "Bor" Alexei Ulyukayev acknowledged that the coming months can be expected deterioration of the situation with liquidity, and promised to support the banking system.

Uplift rates demonstrative TSB - a signal that the Bank of Russia is ready to worsen the situation of liquidity in the banking system for their own purposes. It should be noted, the growth rate for foreign loans backup Nor will reduce demand for loans outside Russia, but it is in keeping with statements by the Ministry of Finance on the need to limit the intake of large loans for the country.

Some economists talk about "inconsistencies" Action Securities. Yevgeny Nadorshin from the bank "Trust" expected "opposite action by the Central Bank". He recalled that raising rates - "an instrument of reducing economic activity", and concludes that the effect on the banking system will be negative. Other economists, such as Yaroslav Lisovolik, saw no inconsistency: they suggest that if the measures are "cosmetic" and demonstrative in nature, the loss or substantial liquidity, or the economic growth they do not cause. Moreover, raising the rates in the economy may even encourage the inflow of foreign capital, thereby simplifying the situation with liquidity.

Raise rates, ' "notes" can have unexpected effects foreign policy: CBR became one of the few central banks the world, increasing rates at a time when the United States Fed and the ECB to reduce. Perhaps raising the rates - an attempt to illustrate the thesis of the Bank of Russia Alexei Kudrin as an "island of stability" in the face of global financial turbulence. In doing so, monetary authorities of China in January, raising the stakes in the fight against overheating of the economy, are also stricter rules backup.

To struggle with the same inflation TSB will still remain on strengthening the ruble - the odds that it will remain essentially anti mechanism. That is the conclusion reached, in particular, of the New Economic School professor Konstantin Sonin. "For the Russian economy, all bets Central Bank in terms of the impact on the rate of growth of money supply are much less important than, for example, the rate for the economy of the United States Fed. Much more useful for reducing inflation, it would be the ruble, "- he says. Lissovolik predicts that in 2008, the ruble could strengthen to a basket of currency is not less than 2%, which is even stronger than last year.

Discuss scenario more radical revaluation, by 10-20%, economists still do not. While these actions could seriously derail the pace of inflation, the effects of such a shock potentially dangerous, not only economically, but also from a political point of view. However, if the parameters of the spring of 2008 world crisis in the financial system would be worse than expected, MOF, the Central Bank and the Government will discuss the most innovative solutions. At least TSB action last week showed its willingness to surprise the economy.