The Bank of Russia has extended the term of provision of lending to banks against their assets

Previously, the maximum term of such loans was 181 days. Meanwhile, the interest rate by loans extended for the term between 181 and 365 days is set at the level of 13% annualized.

So, the CBR has continued pursuing its policy aimed at provision of banks with "long" credit resources, with the respective interest rate being set at a fairly low level. Given that by our estimates, in 2009 inflation rate should be well in excess of 13%, the real interest rate by such loans will de-facto be negative. Meanwhile, in the present hard macroeconomic situation, such a policy appears sound. But given that the financial crisis is most likely to persist for more than a year, provision of loans for the term of 365 days may also appear insufficient.

P. Trounin, Head, Department of Monetary and Credit Policy