13 December, Reducing the key rate, the Central Bank again admitted that inflation will remain below the target range of 4%, the demand pinched, but to disperse it cheap money is dangerous, and without structural reforms the economy can’t accelerate. The limited ability of the Central Bank, said its Chairman Elvira Nabiullina: the demand in the economy depends primarily on the willingness of business to invest. Earlier, a different view was expressed by the Minister of economic development Maxim Oreshkin: “Inflation is just nowhere to take,” because monetary policy has not yet led to any growth in lending activity (quoted by “Interfax”). “Vedomosti” was discussed with economists whether the Central Bank the opportunity to stimulate demand without jeopardizing macroeconomic stability and what will the inflation rate in 2020.
the Chief economist of “VTB capital” Russia and the CIS Alexander Isakov:
“About the state of demand from the population can be judged according to Rosstat, inflation in the unregulated segment of the market of services: legal, educational, medical, driving school, language schools, etc, in the middle of the year demand was weak, prices in this segment grew by 2.8% and 2.9% in annual terms, but in October – November, their first growth accelerated to 3.8% and then to 4.1%. The demand for these services can best reflect the changes of household budget, it is less salomlar the volatility of the exchange rate or the weather.
CB’s the fifth time this year has lowered its benchmark rate cut to 6.25% expected and the market, and economists, the Economy
In 2020 due to the increase in government spending will increase employment in sectors related to national projects, will increase wages, improve your health demand.
Now to the decision of the Central Bank affect demand indirectly, through the yield of OFZ. The key rate is close to neutral range (6%), and the yield of OFZ – to its fair level: zero coupon incomednosti 10-year OFZ bonds is 6.3–6.4%, and five-year – about 6%. The yield of OFZ form all rates in the economy – for example, for the five-year OFZ is possible to predict the average rate of the mortgage – they are higher by about 2.5 percentage points more Likely, all other rates will gradually come in line with these returns.
According to our forecasts, inflation in March 2020 will amount to 2.7% in June and 3.1% in December from 3.9 to 4.2 percent”.
Head of Analytics and strategic marketing PSB Nikolai Kashcheev:
“the Central Bank can stimulate demand only quite risky in the current situation, instrument – credit money. He goes to meet his many critics, again lowering the key rate by 0.25 p. p. of Course, this rate does not stimulate lending, but also creates risks. To risk macroeconomic stability for the sake of unwarranted acceleration of economic growth, the Central Bank will not.
Future government spending aimed at encouraging greater offer than demand. They are able to produce a limited effect, but steady growth, most likely, will not. It is not enough to fill in the car engine oil, it is necessary that at least worked fine candles, and then she’ll go. “Candles” in the economy, we can say that there income is not rising, investors have no desire to invest.
Inflation next year will remain low, but this is expected with economic growth of 2% in the best case, where did it come from?”
Main Global Markets economist BCS Vladimir Tikhomirov:
“As can be seen from retail sales dynamics (growth in January – October 1.5%) and investments (0.8% in the third quarter), the demand is really much ahead. But it didn’t last year, and the General state of our economy: companies prefer not to invest, not seeing the demand internal or external. Best of all, the situation reflects the dynamics of real disposable incomes, which have shown explosive growth in the third quarter of 2019 (according to Rosstat, by 3% yoy; during January – September earnings rose 0.2%) for the first time since 2014
the lower rates should lead to lower cost of lending and support demand, but if you don’t grow incomes, the growth of consumption loans is fraught with the growth of overdue debts. Companies simply have nowhere to invest – the growth dividend yield suggests that they prefer not to invest, and distribute them among the shareholders. Therefore, the Central Bank may not, without creating risks that affect demand and the economy, and it is a global problem.
to Predict how government spending may affect inflation in 2020 is impossible, because it is not known what the money will reach the economy and on what projects. Many projects are still not defined or are under development. Our forecast of inflation of 2.6% and 2.7% in January, 3% in the end of the second quarter, 3.8 per cent at the end of 2020″.
previous topic: Low growth of the economy and the threat of new sanctions hinder the development of Russia Chief economist at ING Russia Dmitry Dolgin:
“the Possibility of the Central Bank to stimulate demand is very limited. Yes, it would be theoretically possible to stimulate it by monetary measures, but it would be strange, on the one hand, to tighten macroprudential policies, and on the other to try to stimulate demand low rates. That would be movement in different directions, and would demonstrate that the Central Bank does not know what to do.
from 2020 If government spending will grow more than the budgeted 5% in nominal terms (to be catch-up growth after neosporine budget by 1 trillion in 2019), it will help inflation to return to the level of 4%. We expect in I quartale inflation at 2.3%, and by the end of the year to 3.7%. But if the trend continues and the costs will be financed with difficulty, inflation is unlikely to overcome 3%, and then the Central Bank will continue to ease policy and lower the rate below the neutral range, i.e. below 6%”.
