The Bank of Russia Has Preserved the Monetary Policy Trend

The regular meeting of the Board of Directors of the Central Bank of the Russian Federation did not result in a change in the monetary policy: as before the Bank of Russia made a decision to leave unchanged the rate of refinancing, as well as interest rates on operations related to liquidity absorption and short-term liquidity provision.

At the same time, from June 11 rates on a number of long-term refinancing operations are reduced by 0.25 p.p. In particular, the rates on long-term (over six months) loans secured by gold or non-market assets or sureties, as well as minimum interest rates at auctions for provision of liquidity for the term of 12 months were reduced by the above value. So, the passed decision fully repeats decisions of April 3 and March 15.

It is believed that that trend of the monetary policy of the Central Bank of the Russian Federation is correct and the latter should not reduce now short-term interest rates which actually have an effect on the situation on the money market.


First, according to our estimates, Russian GDP is close to the potential level. Undoubtedly, if under effect of external shocks a threat of a large-scale recession arises, a short-term reduction of interest rates will be desirable and even necessary. But at present, no such threat exists and the estimates of the Central Bank of Russia and the Gaidar Institute point to that.


Second, there are no grounds to maintain that in Russia the rates of lending to the real sector are high, while the above reason is often used as a justification of monetary easing. Before the crisis, Russian real lending rates were the lowest in the world. After the crisis the rates grew, but they are still below those of many developing countries.


Third, the problems faced by the Russian economy cannot be dealt with by monetary measures. Lack of long-term money points not to toughness of the monetary policy, but to weakness of the financial system because its main function consists in transformation of short-term savings liabilities into long-term loans.


P.V. Trunin, PhD, Head of the Monetary Policy Department