The Board of Directors’ Decision on the Bank of Russia Interest Rates (Unofficial translation)
The Board of Directors’ Decision on the Bank of Russia Interest Rates
(Unofficial translation)
The Bank of Russia External and Public Relations Department informs that on August 4, 2011 the Board of Directors of the Bank of Russia decided to keep the refinancing rate and 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 risks to the sustainability of economic growth, including those associated with the uncertainty of the global economic conditions.
The pace of inflation continued to decrease and reached 9.0% over year ago in July (9.4% in June). The disinflation was still largely driven by certain food prices. Favourable grain crop forecast together with the world food market conditions provide for the reduction of the corresponding inflation risks. Observed decline in inflation expectations may contribute to the decrease in inflation rates in the future.
Meanwhile the probable decline in the propensity to save implied by the continuing slowdown in households deposits growth and the faster growth of retail sales in comparison with the real income, could result in higher level of economic activity but may also be a source of additional inflation pressure.
Certain macroeconomic indicators in June pointed to the improvement in economic conditions, however, the risks to the sustainability of economic growth persisted. Industrial production expansion continued and its annual growth rate increased for the first time this year. The unemployment rate decreased, though this decline was again to a great extent explained by the seasonal effects. Investment in production capacity continued to recover after the slump at the beginning of the year, however the reduction of its annual growth rate in comparison with May could indicate the inconsistency of the trend. Poor economic confidence indicators also reflect the remaining risks to growth sustainability.
Considering current domestic and external economic conditions and the effect of the monetary policy measures, implemented in recent months, the Bank of Russia judged that the current level of money market interest rates was appropriate to maintain the balance between inflation risks and risks to economic activity in the coming months.
The next meting of the Board of Directors on monetary policy issues is planned to be held in September, 2011.
Interest rates on the Bank of Russia operations, % p.a.
| Purpose | Type of instrument | Instrument | Term | Rate since 31.05.11 |
| Liquidity providing operations | Standing facilities | Overnight loans | overnight | 8.25 |
| FX swaps | 1 day | 8.25 | ||
| Refinancing operations (fixed rates): — Lombard loans, REPO | 1 day, 7 days | 6.75 | ||
| — Lombard loans | 30 days* | 6.75 | ||
| — REPO | 12 months* | 8.00 | ||
| Loans secured by non-marketable assets and guarantees (fixed rates) | 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 | 7 days | 5.50 | ||
| 3 months | 7.00 | |||
| 6 months* | 7.50 | |||
| 12 months* | 8.00 | |||
| Liquidity absorbing operations | Open market operations (maximum interest rates) | Deposit auctions | 1 month | 5.50 |
| 3 months* | 6.50 | |||
| Standing facilities | Deposit operations (fixed rates) | 1 day, 7 days, call | 3.50 | |
| Memo item: | ||||
| Refinancing rate | 8.25 | |||
* Operations have been suspended.
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