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Will it be 23% in December? Experts say there is no limit to the increase in the key rate, as well as to the growth of prices
The Central Bank has probably decided to continue rewinding Russia's economic history. State Minister Elvira Nabiullina does not abandon anti-inflation rhetoric, so everyone expects interest rates to rise to 23% in December. That happened in April 2002. Oh, how I wish I could bring back all the other characteristics of that era. Sergei Sobyanin is not only the mayor of Moscow, but also the governor of Tyumen Oblast. But the governor of Chukotka is Roman Abramovich. Every iron plays "Tea for Two" and "Guests from the Future" (they didn't run away). Oh, and most importantly: 1 dollar is 31 rubles, and 1 euro is 28 rubles.
Alas, it looks like this will not return. However, as in 2002, key rates will be in effect. And it is not historians who are talking about this, but economists. They all agree: the consequences for the entire economy will be extremely serious.
Moreover, the head of the Central Bank Nabiullina is very serious. If she does not agree to a tight monetary policy, the consequences for the economy will be even worse. Moreover, Nabiullina gently hinted that there is no upper limit to which key interest rates can jump. So, if inflation does not stop in 2025, we will all remember 2000 and 1999, when the refinancing rate was 50%, and recently there was a time when we were talking about 210%.
At the same time, Nabiullina herself stated that she does not agree with the opinion that raising interest rates will accelerate inflation. Speaking about the effectiveness of the base rate, she noted that it is more effective than ever and the mechanism of its impact on inflation has not changed.
"If the rates had not been raised to 16%, we would have already seen a much more 'explosive' growth in both corporate and retail lending, and the overheating of demand would have been much stronger. Inflation will be much higher. I assure you," Nabiullina said. According to her, the Central Bank's tight monetary policy "protects salaries, pensions, benefits and savings from inflation."
"The increase in base interest rates contributes to the deterioration of the situation for consumers and businesses, mainly due to the growth in the cost of debt financing," explains Valery Zolotukhin, founder of the investment company IMPACT Capital, to MSK1.RU. - Consumer loans, car loans, mortgages and business loans are becoming more expensive. Yes, as a rule, all types of loans are available. And a decrease in demand for credit services can slow down the country's economic activity. This will also be facilitated by higher interest rates on deposits, which will force the population and businesses to invest their free money at attractive interest rates.
— Yes, that is true. Raising interest rates is primarily aimed at containing inflation. This means that consumer prices should stabilize or, at least, their growth rate should decrease. But at the same time, much depends not only on the key rates, but also on the overall situation in the economy and specific sectors of goods and services, the level of competition, the share of imports and many other factors.
Because the demand is low
However, financial consultant and founder of Rodin.Capital Alexey Rodin agrees with Naubiullina's conclusions. In other words, government support for the real sector of the economy is one of the main drivers of inflation. After all, the more free money there is in the economy, the more of it will be spent. And the price rises.
"Inflation has not yet been overcome and there are many objective reasons for this," explains Roden. - Let me list just a few. Subsidized loans to support businesses struggling with government spending and sanctions related to the defense sector. Subsidized loans to privileged categories of citizens and high-income participants of the SVO and their family members. In addition, the pressure of sanctions makes imports increasingly expensive, and Russian businesses are increasingly dependent on expensive imported raw materials, equipment and components.
- There is one more aspect. At current interest rates, mortgages and consumer loans are already practically unaffordable for the average citizen. If interest rates continue to rise, loans will become more expensive. But prices for food, gasoline and basic necessities will continue to rise until regulators tighten monetary policy to bring inflation to the desired 4%.