Increase in structural liquidity surplus in December 2018

According to the 34th issue of the comments ‘Banking sector liquidity and financial markets’, in December 2018 the structural liquidity surplus grew amid traditional end-year high revenues of the banking sector via budget accounts.

Short-term interbank lending rates approached the key rate, given the rebound in demand for ruble liquidity in the market. The FX liquidity position remained favourable. In contrast to previous years, interest rates in the FX swap segment did not demonstrate increased volatility closer to the year-end.

In the middle of December, the Bank of Russia decided to raise the key rate by 25 pp. Despite the fact that not all market participants expected the key rate increase in December, the taken decision did not exert any material impact on the future key rate path.

The situation in the Russian financial market remained relatively stable despite massive selling in the markets of most advanced economies and the global oil price downturn.

In November-December 2018, banks continued to expand lending to the economy. As before, household lending grew most rapidly which was in part supported by a drop in retail lending rates amid a slight growth in corporate lending rates.