Inflation expectations continue to decline among market participants

According to the 19th issue of the ‘Banking Sector Liquidity and Financial Markets’ commentary, the inflation slowdown in September caused a further drop in market participants’ inflation expectations and in their expectations concerning the key rate level for end-2017.

In September, banks faced liquidity inflow leading to the upward revision of the end-2017 estimate of the structural surplus. A continued structural liquidity surplus in the banking sector is expected in October.

Interbank lending rates remained in the lower range of the Bank of Russia interest rate corridor. As in August, this was linked to persistently weak competition among borrowers in the interbank lending market amid growing liquidity supply.

The financial markets remained fairly steady throughout September. Along with a robust ruble and on-going OFZ purchases by foreign investors, the Russian stock market looked very attractive compared with other EME markets.