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Statement by Bank of Russia Governor Elvira Nabiullina in follow-up to Board of Directors meeting 7 February 2020

7 February 2020

Today, the Board of Directors has decided to cut the key rate by 25 bp to 6.00% per annum.

We hold open the prospect of key rate reduction at the upcoming meetings, if the situation develops in accordance with our baseline forecast.

When taking our decision today, we took into account a wide range of factors.

First. Inflation dynamics.

In January, annual inflation declined to 2.4%. Let me remind you that it was 3% by the end of 2019. The inflation slowdown itself vs the December reading was expected and was mainly related to the factoring out of the VAT rate hike from the calculation last year. However, inflation showed a more considerable decline than we had expected.

The seasonally adjusted monthly inflation rate also indicates a low inflationary pressure. Core inflation and other stable price dynamics indicators are close to 3% or lower in annual terms.

We expect that, in the first quarter, annual inflation will reach about 2%. In the middle of the year, it will begin to rise, gradually returning to the target. We maintain our inflation forecast for 2020 at 3.5-4%.

Now, let me speak about the drivers behind current inflation dynamics and why we think that it will return to the target.

Economy's demand. Although we recorded an increase in domestic demand in the second half of the last year, external demand remained quite subdued. Among other things, this resulted in a decline in Russian exports. That said, the dynamics of domestic demand in 2019 were very irregular. Weak demand in the first half of the year led to a fast inflation slowdown to the current low level. The revival in domestic demand in the second half of 2019 and its further expansion this year will become the main driver behind the return of inflation to the target.

Both consumer and public demand has improved. Private consumption growth was driven by increasing real wages and disposable income, including due to falling inflation. The end of the last year also saw a rise in public expenditures and a more extensive usage of funds to implement national projects. In our opinion, these trends will continue this year.

I think it’s important to particularly note the following. From 2015 to 2019, the macroeconomic policy—both monetary and fiscal—was largely determined by the necessity to adapt our economy to the dramatic changes in external conditions that took place in 2014. By the need to increase macroeconomic stability, price stability and fiscal sustainability, to lower the dependency of the economy on the situation in commodity markets and geopolitical risks.

As of today, this goal has been largerly accomplished. The period of adaptation has ended. Budget consolidation has completed, and there is even some space for the accommodative fiscal policy.

Annual inflation has reached the target and since 2017 has averaged 3.7%. It was already last autumn that we completed the transition from a moderately tight to neutral monetary policy.

We cannot afford treating last five years’ achievements recklessly. These achievements have established a foundation to implement an effective countercyclical economic policy.

It is important to note that the effect of the fiscal and monetary policies will largely depend on the behaviour and sentiment of private business and households. It will depend on their response to the decline in interest rates, their use of additional income (whether they will save or spend it) and on whether private investment will grow in response to the budgetary impulse. And this, in turn, depends heavily on the sentiment of producers and consumers, their confidence in the future, their investment horizon, personal plans and the business climate in general. If the sentiment remains cautious, moderate, both fiscal and monetary policy measures will only have a limited effect on the expansion of aggregate demand and sustainable economic growth.

Back to the current situation. Exchange rate dynamics are yet another driver behind the deviation of inflation from the target and subsequent return to it. Last year, the ruble significantly appreciated, and today we still see the accumulated effect of this appreciation. Even with the January fluctuations factored in, the ruble remains stronger than in the previous year. In the first half of the year, the effect of the last year’s appreciation and its disinflationary influence will be exhausted.

Food markets. We are observing price dynamics that are not typical for this time of the year. Seasonally adjusted food prices have basically remained at the same level for several months without growth. The supply factor and the successful developments of our agricultural sector play an important role here. It is difficult to estimate the proportion of temporary and persistent factors in the food market reliably. There remains a potential for further production growth and capacity expansion. At the same time, this sector’s export capabilities are also expanding. Production growth leads to increased competition. We base our view on the fact that this will gradually result in the aligning of food price dynamics with those of other goods and services.

Inflation expectations. No significant changes have been observed here in the recent months. Over the one-year horizon, analysts’ expectations are forming close to 4%. Short-term price expectations of businesses have stabilised at an all-time low levels. Households’ inflation expectations are currently holding close to the two-year minimum. However, we continue to estimate this level as increased. The main thing is that we are yet to estimate the anchoring of inflation expectations of both households and businesses when the slowdown of inflation ends and it returns to the target.

Economic growth dynamics are the second most important factor behind our decision besides inflation.

In 2019, GDP grew by 1.3%, which is the upper bound of our forecast range. Internal consumption growth slightly overshoot our expectations whereas external demand was weaker. As I have already noted, the growth of demand and other economic activity indicators occurred in the second half of the last year, including owing to the accelerated budget execution.

The Board of Directors retained almost the same view for 2020 and medium-term forecast at this meeting. This year, economic growth will exceed the last year’s reading and reach 1.5–2%. This will also drive inflation back to the target. We expect that the growth rate of households’ consumption will remain at the current level while investment growth will notably accelerate. The effect of fiscal measures on the forecast may be clarified after the introduction of amendments to the budget by the Government. Regarding external demand, the forecast implies that exports will recover after the last year’s decline. However their dynamics will be contained by moderate global economic growth rates. In our view, the global economy can be affected by the next phase of trade negotiations as well as the further development of the coronavirus situation. At the moment, we estimate its influence as temporary.

Third. Monetary conditions. They have been generally easing.

This fully refers to price lending conditions. Yields of federal government bonds stay at their lows for the last few years. Interest rates in the deposit and credit market continue to go down. The average interest rate on housing mortgage loans hit its new low in December, dropping to exactly 9% per annum. There is room for further decrease in interest rates owing to the earlier key rate decisions.

However, non-price conditions have been changing in diverse manner. In consumer lending, they have been tightening, which is associated with the macroprudential measures implemented by the Bank of Russia. I would like to remind that these are targeted measures we are taking to maintain financial stability in individual segments of the financial market. In this situation, the growth of consumer lending is slowing down, and this trend will continue.

At the same time, there is a potential for easing of non-price conditions in the corporate segment. This is already happening at the moment. Areas of lending to corporate borrowers are expanding; long-term loans are becoming more affordable, including owing to the development of the bond market. This is also driven by the gradual improvement of the loan servicing quality.

Fourth. There have been some changes in external conditions. But our opinion regarding their overall impact has generally remained the same. China and the USA have signed a trade agreement. This means that the significant risks we saw in foreign trade have not materialised. This positive news supported market sentiment.

Yet, new challenges have emerged and they involve new risks to global economic growth. The coronavirus problem is already affecting the economic situation in both individual countries and the world in general. Speaking of Russia, its influence on our economy is currently estimated as minor.

The reaction of the ruble exchange rate to a substantial decline in oil prices in January and early February and increased volatility in foreign financial markets was moderate. The country risk premium for Russian assets is currently close to its record lows, after its persistent and significant decrease last year. This trend is supported by macroeconomic stability, primarily the accumulated safety cushion in the form of the National Wealth Fund.

Finally, regarding inflation risks.

First, I would like to remind you what we call ‘risks for inflation’, or ‘inflation risks’. The Bank of Russia’s baseline forecast implies a certain path for inflation to return to the target. When we are talking of risks, we mean the reasons that may cause inflation to deviate from the forecast path upwards or downwards. These are proinflationary and disinflationary risks respectively.

Currently, disinflationary risks significantly prevail over the short-term horizon.

First and foremost, this is how demand is changing in the domestic market, both among consumers and investors. An increase in consumption and investments may be lower than we expect, even in the situation of the continuing easing of monetary conditions and accommodative monetary policy. This scenario is possible if there are no marked positive changes in business and consumer sentiment.

Another short-term disinflationary risk is a more considerable and longer-term impact of the ruble appreciation last year, than it was assumed in our baseline forecast.

In addition, there is a range of factors related to both disinflationary and proinflationary risks. One of them is food prices which are very volatile. External conditions are another factor. If the coronavirus situation deteriorates or any complications arise at next stages of the trade negotiations between the USA and China, this can lead to a rise in volatility in financial and commodity markets, a capital outflow and pressures on emerging market currencies, which are proinflationary factors. At the same time, worsening of the situation in the global economy against this background, a decline in external demand for Russia, a slower inflation growth in Russia’s trade partners may ultimately become a considerable disinflationary factor.

The nature of influence of fiscal policy on inflation will depend on the pace and efficiency of the implementation of the planned measures over the forecast horizon.

As before, we can say that unanchored inflation expectations may also be considered a proinflationary risk.

Besides, previous decisions to cut the key rate may have a stronger upward effect on inflation than we estimate in the baseline forecast.

Given the above, we currently estimate mid-term risks for our inflation forecast as balanced.

And to conclude, a few words about the outlook for monetary policy.

Given the today’s key rate decision, we have reached the lower bound of the 6-7% range which we consider neutral for the inflation target around 4%. I would like to emphasise once again that, as such, the neutral rate of interest is not observed directly, it may be determined only approximately. Besides, it may change in time under the influence of various factors. We have yet to estimate and, possibly, adjust this range. Objectively, today we still lack sufficient data for this. It will require a longer period of time, maybe even more than a year.

But what is important to stress today when the key rate is at the lower bound of the range that we have estimated. These bounds, both the upper and the lower ones, do not in any way set any thresholds for possible movements of the key rate, whether upwards or downwards. If our estimate of inflation and the economic situation require, the key rate may be set beneath the lower bound of the neutral range. This will mean loose monetary policy. Similarly, when inflation significantly deviated upwards from 4%, we maintained the key rate above the upper bound of this neutral range for a long period of time.

We hold open the prospect of key rate reduction at the upcoming meetings, if we consider it necessary to bring inflation back to the target, that is close to 4%.

Question and answer session for the media

QUESTION (Reuters agency):

Are we right in understanding that the neutral rate estimate has not moved down? The 6-7% range remains in place, and if the key rate can go lower, will it mean accommodative monetary policy?


Yes, that is right.

QUESTION (Interfax agency):

The Central Bank and the Government have agreed on a new coordination mechanism to support macroeconomic stability. What is this mechanism, what will be its principle? Will it be meetings of Central Bank representatives with the Government? How frequently will they take place? Will they be held at fixed times, or on an ad hoc basis? And what is the difference between this mechanism and the measures proposed earlier by the former Minister of Economic Development Maxim Oreshkin?

And the second question. Back in 2018, the Central Bank changed the structure of gold and foreign exchange reserves, reducing the dollar share in favour of the yuan and the euro. And at the time, you said that gold and foreign exchange reserve structure met the financial stability objectives. Do you continue to see the gold and foreign exchange reserve structure as meeting the stability objectives, taking into account the new risks and the coronavirus?


As for our interaction with the Government, in fact, we are currently discussing two initiatives in a substantive manner, and I would like to emphasize — two initiatives. The first one concerns macroeconomic stability issues. We have agreed that we will communicate more frequently and in a more dynamic fashion, and we will verify the information we have and our assessments of the situation.

We have not yet talked about this as a working group. This is a mechanism of regular meetings, if such regular consultations are to be held with a view to making more precise decisions, while being more informed about each other’s actions. It is a coordination mode. It actually existed as such, but maybe (the meetings — ed.) did not occur so often when we discussed yet another forecast, a major document or a draft budget. But we have agreed to do this on a practically constant basis. And I do think that it will benefit both the Government and us in terms of the efficiency of our decision-making.

It will not occur a commission’s activities. You are talking about the difference with the past (measures — ed.) and, even more so, with those on aggregate demand management. I personally do not understand what aggregate demand management policy is. There is monetary policy and fiscal policy. They certainly affect aggregate demand. But aggregate demand is also influenced by other factors, to say nothing of external factors.

These are, in fact, business and consumer sentiment, and investment sentiment, which determine, among other things, how monetary and fiscal policy measures can be transformed into demand. Therefore, it is essentially the whole set of economic policies.

With regard to the second initiative, indeed, we have agreed to establish a working group that will deal substantively with issues related to the development of financial instruments, in fact, the financial market in order to ensure that private investors’ projects promote economic growth.

Let me give the example of escrow accounts. That was a rather difficult transition. We worked with the Ministry of Construction and the Government on a constant basis to ensure the difficult, but smooth, transition.

This interaction, when new instruments emerge, is indeed possible. I believe that such areas may also include the expansion of project financing, which remains underdeveloped. We have taken special regulatory measures, such as on project financing for Vnesheconombank. This should be expanded to all sectors, as well as to the financing of small- and medium-sized businesses, and some other clusters of projects.

These may require changes in legislation, changes in our regulatory framework. This is an applied initiative where the Central Bank is ready to operate actively as a mega-regulator. It has nothing to do with monetary policy. These are the two initiatives.

As for foreign currency reserves, we are pursuing policies to ensure that they are retained and diversified, and, in our opinion, the structure of foreign currency reserves, which there was (as you know, we actually release information with some lag), is entirely in line with these goals. Our management goals are precisely that.


There are two questions, if possible. The first one concerns the efficiency of the interest-rate policy. The Central Bank began a rate cut last June. More than half a year has passed, and, as far as we can see, there has been a weak price response. How surprising was this for the regulator? How do you explain such a weak response, and what does it say about the efficiency of the Central Bank’s interest-rate policy?

The second question concerns the press release. Why has the Central Bank stopped allowing for budget spending factors as a factor of uncertainty? You used to always mention it before, and now it does not exist as a factor of uncertainty. How come? Is there already some sort of synergy with the Ministry of Finance, or are there other reasons? Thank you.


Thank you. With regard to the first question, as for the impact of our monetary policy decisions on interest rates and on inflation, it takes time. We have always said that monetary policy works with a lag: it is always like this.

We estimate the lag from our decisions (on inflation — ed.) to be some 3-6 quarters. These decisions, you know, have been taken gradually. In fact, a total of 6 decisions have been taken by now, so there will be a cumulative effect. We see that, most likely, the peak effect, say, from the decisions taken up to today will be in the second half of this year, in the 3rd-4th quarters. This is absolutely normal behaviour for the monetary policy transmission mechanism.

In addition to that, there were some factors that may have been underestimated in our forecasts. These include the appreciation which now has a disinflationary impact. Budget spending in the second half of the year was also a factor of uncertainty for us. And in general for the last year, you know, the non-oil and gas deficit stood at 5.4%, that is, slightly below the level we had expected.

And in the press release we actually state that the budget factor is one of the factors that will influence inflation, including the decision on the investment of the liquid part of the National Wealth Fund. Also, inflation movements in 2020 will be influenced by the schedule of budgetary expenditures. That is another issue.

We believe that the budgetary expenditures will be more uniform this year; nevertheless, part of the decisions relate to the second half of the year. Usually, budgetary expenditures are implemented on a seasonal and uneven basis. It is just that last year this was more pronounced. We are sure to face the same seasonality this year.

Much will depend on how the funds that were not used last year are spent, and on the period they are stretched for. By the way, that is exactly where we need more substantive consultations with the Government so that we can take this into account in our decisions. This dependence remains in place, and we kept it in the press release.

QUESTION (Bloomberg agency):

Is the phrase ‘in the coming meetings’ instead of ‘at one of the next meetings’ an indication that the rate could be lowered repeatedly this year?


That phrase — if you look at the context in which we used it — means that there is a relatively high probability of a rate cut at the next meeting, but it is not guaranteed. Whether there may be another lowering of the rate depends on how we assess the economic situation, what data come to light, what happens with inflation and not only the current inflation level, but above all on how we refine our forecast for inflation and economic growth.

When making decisions, we certainly take into account its current dynamics, but for us, the main thing is the forecast of the future dynamics of inflation and economic growth. Therefore, depending on the situation, we will take such decisions.

QUESTION (Kommersant paper):

If you do not mind, I have two questions. The first: the press release states that a change in fiscal policy in social terms will not have an inflationary effect. If, over a three-year horizon, the Government acts within the budget rule, are there any changes in fiscal policy that you will recognise as inflationary? Is that possible at all? Or is it simply impossible if the budget rule does not change?

And the second question. It is not mentioned in the press release. One of your predictive factors is the velocity of money, which is usually considered a constant. It is a calculated index, but technological changes influence it as well. How do fairly quick technological changes in business and some changes in business practices reduce the accuracy of your forecasts? Is that a problem, and can something be done to address it in the near future (within two to three years)? Or should we consider it unimportant?


Thank you very much for your question. We really believe that inflationary risks associated with additional budget expenditures to implement a package of social, demographic and investment measures, and, basically, the inflationary effects (of these measures. — ed.) are very limited, and this is largely due to the fact that the Government, as we understand it, and we proceed from this, will act within the budget rule.

If there are any future changes to fiscal policy, but everything takes place within the budget rule, then the inflationary risks are very limited. I can speculate that if there is any serious unevenness in budget spending again, for example, within a year, it may create temporary surges of inflation, stoke inflation expectations, and have some spillover effects, but these are temporary factors. And in that case, on the whole, we do not see any inflationary effect.

As for the introduction of technological innovations, the velocity of money and, most importantly, the reduction in transaction costs in the economy (as this leads to the reduction of transaction costs in the economy), these are generally positive for economic growth. If we talk about the impact on macroeconomics, these factors can have a positive effect.

We do not take them into account directly in our macroeconomic forecasts, because currently, compared to other factors that affect certain indicators, they are, of course, not significant. And in fact, there is a difficulty. And not only in our country.

You know that the whole world is discussing how to measure the effect of digital, the often invisible effects of new technologies on the GDP, on quality of life, and on income. We also have this problem, but it is unlikely that the Central Bank will be able to solve it on its own. It exists, and of course, it can generally affect the accuracy of assessments of the situation and further development, and the positive effects of the development of these technologies may be underestimated.

I think that this kind of underestimation is usually the case with new technologies, and with these technologies in particular, as they have great social effects. Maybe not commercialised, not reflected in the profits of individual companies and so on. This is a very important topic, but we will certainly work on it, and our research teams will also study it, as potentially this is a factor that should be taken into account.

QUESTION (RIA Novosti agency):

Ms Nabiullina, the Central Bank mentioned in the press release that the coronavirus is a new uncertainty factor for inflation in the next quarters. Nevertheless, it lowered the key rate, and hardly changed its medium-term forecast. Do we understand correctly that the Central Bank considers this a temporary phenomenon and does not expect the coronavirus to be a new black swan event in the global economy?

And a question about inflation and the ruble exchange rate. You said that an additional factor for 2% inflation was the strengthening of the ruble. Now the ruble is weakening. So, what is the reason for the weakening of the ruble, in your opinion, and when will the exchange rate effect on inflation be exhausted in 2020? Thank you.


As for the coronavirus, we consider it as a risk in our baseline forecast, we talk about it. But it is not yet possible to evaluate its effect, as there is a lot of uncertainty. Everything will depend, inter alia, on the duration of the epidemic.

Currently, we assess its influence as slight. We will evaluate this situation together with the other uncertainty factors that exist. You said that ‘it is a black swan’. Perhaps we can call it a black swan event. Our task is to ensure financial and macroeconomic stability. Therefore, improving resilience and creating buffers and safety cushions greatly increase the resilience of the entire economy as a whole to such black swan events.

And therefore, macroeconomic stability is needed in order for the economy and the standard of living to be less vulnerable to such adverse, unexpected things.

As for the ruble exchange rate and inflation: Firstly, the influence of the exchange rate on inflation as such will never be exhausted; the exchange rate channel exists. The exchange rate moves, the effects overlay each other, so it is also quite difficult to differentiate them. Last year we saw the strengthening of the ruble exchange rate, this year we see a slight weakening. The effects overlay each other, they are extended in time. And last year, by the way, we saw disinflation effects from the strengthening of the ruble, and we think that part of this disinflationary effect will continue this year. We expect about a 0.2 pp (decrease — ed.) in the inflation rate as a result of the 2019 rate strengthening, but that is an estimate.

As for the weakening of the ruble, it is necessary to track further dynamics. We will analyse the dynamics of the exchange rate as a factor. Returning to your question on when the impact of the ruble exchange rate strengthening will end. I said 0.2 pp, but the effect itself will probably end somewhere in the middle of the year, that is, in the first half of the year, the inflation rate will still reflect the effect of last year’s strengthening.

QUESTION (Politsib.ru magazine, Barnaul):

How will the rate cut influence consumer lending and mortgage loans? Can we expect minimum mortgage rates this year? How does the Central Bank rate affect investments, what will happen to investments this year?


Of course, the reduction of our rate, and above all a decrease in inflation, are factors that influence the reduction in lending rates. We can see this effect. Consumer lending rates are also decreasing. Mortgage loan rates have reached a historic low of 9%, but, in our opinion, that is only the beginning and there will be a further decrease in mortgage rates. Therefore, this expands the possibilities for granting loans both to our citizens and to businesses. Certainly, decreasing interest rates themselves make investment lending more accessible, primarily, due to the fact that low inflation lengthens planning horizons and, basically, leads to a lengthening of loans. That is what is needed for investment. We believe that investments will accelerate in 2020.

QUESTION (Vedomosti paper):

Ms Nabiullina, I would like to expand my colleague’s question regarding social expenditures. Currently, the Government is preparing amendments to the budget, which should take into account the future expenses on social support measures proposed by Vladimir Putin. And since you say that the measures themselves will not cause inflationary risks, could you please clarify what sources of financing for these measures would bring inflationary risks, in your opinion, and which of the options for financing these measures you consider to be the most risky and therefore, potentially, more or less desirable? Thank you.


Most likely, measures associated with a change in the budget rule will have the biggest inflationary effect. But, as we understand it, those measures will be funded within the budget rule.

QUESTION (Interfax agency):

Have you decided on the mechanism for linking your foreign currency purchase operations under the budget rule with investments from the National Wealth Fund (NWF)? When do you expect NWF spending to begin after exceeding the 7% bar? What time period exactly?

Second question. On 1 January, amendments to the Budget Code came into effect, leaving only revocable guarantees. Do you not expect or see that the risk of an increase in the reserves of large banks that used state guarantees may occur? Will there be any arrangements or relief for them?

And the third question. Have you continued discussing with the new Government the possible sale of a package of shares in Sberbank? Perhaps, after the departure of some ministers from the old Government, this issue is somehow suspended.


As far as linking our foreign currency purchases with the use of the National Wealth Fund, we are in close contact with the Ministry of Finance and continue discussing this mechanism. It seems to me that I have already said, but I will say it again: we will announce it without fail. Yet, we will do it after the mechanism is specified by law. It will be specified, and we will announce what the mechanism will be.

I can assure you that we are interested in its transparency to the market, and in the mechanism’s having little influence on the dynamics of financial markets. When will these expenses begin? In our view, that will be closer to the middle of the year. It is unlikely that it will be earlier. It is a question for the Ministry of Finance.

As for the guarantees. Indeed, after the amendments to the Budget Code, guarantees cease to be an instrument by which we are ready to accept the fact that reserves are not created. When the guarantee can be revoked under a wide range of circumstances, it does not automatically allow having zero reserves. So, banks should evaluate the financial status of the borrower, as expected, and, depending on that status and on the quality of the borrower, form reserves if these budget guarantees are revocable.

This is in the interests of banks. By the way, banks understand that they need to manage risks. It is not about showing lower reserves to the supervisor. It is real, and we must understand that a loan issued is either repaid or guaranteed by someone. The guarantee concept is established in order to understand that a third party undertakes to repay, for example, loans.

If such obligation ceases to exist, we, of course, cannot take it into account to the extent that it has been so far.

As for the negotiations on the sale of Sberbank. They are not finished, they continue. They are in progress.

QUESTION (Bloomberg agency):

I have two questions about trends that are probably relevant across the world, but have not really touched us, Russia. But we are eager to learn your opinion as the most progressive professional institution in Russia.

The world of investment is changing. And now, major foreign investors are investing in companies with high ESG and socially responsible investing ratings. There are no Russian companies with such a rating. And in our, so to say, fuel energy economy they can hardly be seen. Do you consider this a risk to the Russian financial market? That is the first question.

And the second. About climate. The world’s largest central banks have begun to pay attention to climate change, to the risks it bears. These risks are, in fact, a long-term threat to the global economy, including inflation and financial stability. Are you somehow looking at, in general, the risks of climate change? Are you somehow going to include them in your, I don’t know, in your regulation of financial companies, and perhaps in monetary policy? What is your attitude towards this issue, in general? Thank you.


Thank you. These are really important issues. Investment requirements, probably, have long ceased to be only about a certain return on capital and so on. There is a variety of requirements. What you are talking about is a trend that will only increase in the coming years. And we are well aware of that. Surely, the Russian market, being part of the global market, will also gradually adapt to these requirements and, perhaps, develop its own.

For example, when it comes to green financing. We are currently focused on this topic. We have started to work on it actively. We cannot say that nothing has been done in our country. By the way, we have examples of issuing green bonds, but the practice is not well developed. I am talking not only about the funding of green finance-related projects, but also about more comprehensive assessment of risks which may relate to climate change. Not only in insurance, but also in bank lending and other areas.

We are now examining how these risks may be identified and calculated. We are looking at international experience. It really is one of our priorities. I think it will also be expressed in several new approaches, which we will certainly discuss with the market, maybe in regulatory changes. It is a very important topic. I absolutely agree with you.

There are not any immediate risks at the moment. You asked about any risks to the Russian financial market. Of course, there are no relevant risks at the moment. But it is a problem for the future development of financial markets which we should consider.


I have a question about the working group with the Government. Are its members already known? When will the first meeting be? Thank you.


We are now preparing proposals concerning the members and the topics to be discussed, so it is currently in the developmental stage.

QUESTION (Vladivostok paper, Vladivostok):

One of the most in-demand banking products among Russians is deposits. This type of saving is popular with people of all ages. Will the reduced deposit yield resulting from the lower key rate cause the massive withdrawal of funds from deposits and their investment in foreign cash?


It is true that when rates decrease, they are lower for both credit and deposits. Sometimes we forget about that. Deposit rates are decreasing. However, they remain positive, and we saw the increase of household ruble deposits by 10% last year. This means that bank savings remain attractive to the population.

Yet, we are also observing a rise in the demand for other financial instruments, with which people want to get high yields and enter the markets. This year there is really an unprecedented inflow of retail investors into the stock market. Citizens are making their choice. A deposit is an insured financial instrument.

Instruments with higher yields often have no insurance. In our opinion, people should make informed choices. That is why, by the way, we are promoting a draft bill on qualified and non-qualified investors that will protect the rights of citizens in the case of more active entry into financial markets and their interest in instruments other than bank deposits.

QUESTION (Bloomberg agency):

May I ask about oil? You have not changed your oil price forecasts. In making such forecasts, what behaviour do you generally expect from OPEC? I mean, the continuation of oil production cuts, their extension? Did you consider such an agreement? What is its overall positive or negative impact on the Russian economy?


You know, this agreement is extended from time to time and its parameters may change. We understand that there is a factor of uncertainty concerning this agreement. That is why we try to make conservative forecasts. That is why we have not changed our oil price forecasts for now. By the way, the current oil price is close enough to the one given (in the forecasts — ed.).

If further agreement parameters become known — whether it is to be extended or not, and in what form — we will consider them, but only after the appearance of such parameters.

The systematic approach is to be conservative and consider effects when the parameters are known.

Thank you.