The Board of Directors’ Decision on the Bank of Russia Interest Rates
The Bank of Russia External and Public Relations Department informs that on 12 February 2013 the Board of Directors of the Bank of Russia decided to maintain the refinancing rate and the interest rates on the Bank of Russia operations unchanged (table Interest rates on the Bank of Russia operations).
The decision was supported by the assessment of inflation risks and economic growth prospects.
In January 2013 the pace of inflation increased to 7.1% over a year ago, which exceeded substantially the upper bound of the target range. The acceleration of consumer price inflation was mainly driven by higher growth rates of food and passenger transport services prices, while the nonfood goods inflation remained moderate. The pace of inflation may stay above the target range during the first half of 2013, according to the Bank of Russia estimates. Taking into account the effect on economic agents’ expectations, the inflation rate staying above the target range for a prolonged period of time poses inflation risks.
The dynamics of the key macroeconomic indicators in December 2012 was in line with the previous trends. The growth rates of industrial production remained subdued and the growth of investment in production capacity continued to decelerate. At the same time, the level of industrial capacity utilization is relatively high, economic confidence indicators remain overall positive and labour market conditions together with credit expansion provide support to the domestic demand. According to the Bank of Russia estimates, the gross output remains close to its potential level. Taking into account still relatively high bank lending growth rates, the risks of a significant economic slowdown stemming from the tighter monetary conditions are considered minor.
The Bank of Russia will continue to monitor inflation risks and risks to economic growth, including those stemming from the monetary conditions tightening. In making monetary policy decisions the Bank of Russia will be guided by the inflation goals and economic growth prospects.
The Board of Directors of the Bank of Russia also decided to set a single required reserve ratio on all categories of credit institutions’ liabilities at 4.25%. This required reserve ratio will be applied for reserve regulation starting from the reporting period from 1 March to 1 April 2013. This decision is neutral from the viewpoint of its influence on the banking sector and the current monetary policy stance. Taking into account the substantial increase of exchange rate flexibility as well as external and internal macroeconomic trends the necessity of using the required reserve ratios for the purpose of capital flows regulation decreased significantly.
The next meeting of the Board of Directors of the Bank of Russia on monetary policy issues is planned to be held in the first half of March 2013.
Interest rates on the Bank of Russia operations
| Purpose || Type of instrument || Instrument || Term || Rate since 11.12.12 |
| Liquidity provision || Standing facilities (fixed rates) || Overnight loans || 1 day || 8.25 |
| FX swaps (rouble rate) || 1 day || 6.50 |
| Lombard loans, REPO || 1 day,
1 week1 || 6.50 |
| Lombard loans ||
30 days1 || 6.50 |
| REPO ||
12 months1 || 8.00 |
| Loans secured by gold || Up to 90 days || 7.00 |
| From 91 to 180 days || 7.50 |
| From 181 to 365 days || 8.00 |
| Loans secured by non-marketable assets and guarantees || Up to 90 days || 7.25 |
| From 91 to 180 days || 7.75 |
| From 181 to 365 days || 8.25 |
| Open market operations (minimum interest rates) || REPO auctions || 1 day || 5.50 |
| Lombard and REPO auctions || 1 week || 5.50 |
| 3 months || 7.00 |
6 months1 || 7.50 |
| 12 months || 8.00 |
| Liquidity absorption || Open market operations (maximum interest rates) || Deposit auctions || 1 week || 5.00 |
1 month1 || 5.75 |
3 months1 || 6.75 |
| Standing facilities (fixed rates) || Deposit operations || 1 day, 1 week1,1 month, call || 4.50 |
| For reference: |
| Refinancing rate || 8.25 |
1 Operations have been suspended.