EVGENY GORYUNOV: CENTRAL BANK TOOK A WAIT-AND-SEE APPROACH AND THIS IS ALL BUT REASONABLE
On March 20, Board of Directors of the Bank of Russia decided to keep the key rate at 6% per annum. Evgeny Goryunov, Researcher of the Gaidar Institute, said in an interview to radio “Sputnik”that he approved the decision taken by the Central Bank to keep the rate of interest at previous level.
“The decision taken by the Central Bank of Russia to keep the key rate unchanged against the coronavirus epidemic and falling oil prices is the right move that allows to wait and observe the "turbulent situation" in the markets without sharp turns”.
Evgeny Goryunov said: “Recession is likely to happen in Russia meaning that the interest rate should be lowered. On the other hand, the oil price dropped and Ruble devalued, which means that inflation will increase. Interest rate has to be increased in order to support the Ruble. The Central Bank is in a situation where it is necessary to raise the interest rate on the one hand and lower it on the other. It took a wait - and - see approach and this is reasonable”.
The expert highlighted that Central Bank will not raise the key rate in response to the imminent crisis and expansion of coronavirus epidemic.
"All talks about increase of the key rate go against the strategic position of the Central Bank. The aim of its policy is to reduce losses of producers and households in repaying loans. Reduction of the key rate contributes to economic growth. We need it now in order to counter the impending economic and financial crisis”,- Goryunov assured.