One-year and one-month repo auctions: Bank of Russia commentary on results

The banking sector’s current liquidity level remains adequate. Since mid-May, with a normalisation seen in liquidity factors, the structural liquidity surplus has grown, more evenly distributing liquidity across the banking sector. Interest rates in the money market are largely evolving below the key rate.

However, the Bank of Russia intends to continue the practice of long-term repo auctions given that it cannot rule out the potential for liquidity distributed more unevenly across the banking sector in the context of a sustainable overall structural surplus. As it stands, this instrument adds to market players’ confidence in the availability of options to obtain liquidity if need be; the instrument also affords them more flexibility with managing the maturity structure of their liabilities, while retaining their capabilities to restructure current and issue new long-term loans.