Most segments of Russian financial market demonstrate price growth in October

The rise in quotes was driven by both external and internal factors, in particular improved investors’ expectations regarding prospects of the trade disputes and the Brexit-related situation and the easing of monetary policy in a number of countries, including Russia. These are the findings given in the new issue of the Banking Sector Liquidity and Financial Markets commentary.

The structural liquidity surplus reduced in October. As in the previous month, banks increased balances in their correspondent accounts with the Bank of Russia, which contributed to this drop.

The spread between short-term interbank rates and the key rate remained negative. Interest rates were under the pressure of market participants’ expectations for the key rate cut at the meeting of the Bank of Russia Board of Directors at the end of October. Interest rates in the FX swap segment stayed close to interbank rates as banking sector foreign currency liquidity remained at a comfortable level.

The downward trend of loan and deposit interest rates continued in August–October, being impacted by the Bank of Russia’s key rate decisions. Credit and deposit transactions demonstrated an increase in maturities, which could be driven by a gradual decline in economic agents’ inflation expectations, including for the medium term.