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 10 June 2013 the Board of Directors of the Bank of Russia decided to maintain unchanged the refinancing rate and the interest rates on the Bank of Russia main liquidity provision and absorption operations and to reduce effective from 11 June 2013 the interest rates on certain longer-term operations by 0.25 percentage points (table “Interest rates on the Bank of Russia operations”).
The decision was supported by the assessment of inflation risks and economic growth prospects. The cut in the interest rates on longer-term liquidity provision operations brings the cost of obtaining liquidity from the Bank of Russia by credit institutions closer to the interest rates on the Bank of Russia main liquidity provision operations, which will contribute to strengthening the interest rate channel of the monetary policy transmission mechanism.
In May and at the beginning of June the rate of inflation remained above the target range and as of 3 June 2013 was estimated at 7.4% over a year ago. Core inflation in May amounted to 5.9%. Observed pace of inflation is mainly explained by the food prices growth and the dynamics of certain regulated prices and tariffs. The inflation rate staying above the target range for a prolonged period of time may affect economic agents’ expectations and thus poses inflation risks, in particular taking into account the planned increases in the natural monopolies’ tariffs. However, according to the Bank of Russia projections based on the assumptions of maintaining the current monetary policy stance and absence of adverse food prices shocks, the rate of inflation will return to the target range in the second half of 2013.
The dynamics of the key macroeconomic indicators points that the pace of economic growth remains low. The growth rates of industrial production remain subdued, investment in production capacity continues to decrease. At the same time the consumer activity indicators have been resilient in the recent months. Labour market conditions and credit dynamics are still providing support to the domestic demand. According to the Bank of Russia estimates, there remain risks of further economic slowdown given the weak investment activity and the sluggish recovery in external demand.
The Bank of Russia will continue to monitor inflation risks and the risks of the economy slowing down. In making monetary policy decisions the Bank of Russia will be guided by the inflation goals and economic growth prospects.
The next meeting of the Board of Directors of the Bank of Russia on monetary policy issues is planned to be held in the first half of July 2013.
Interest rates on the Bank of Russia
operations
(%
p.a.)
| Purpose | Type of instrument | Instrument | Term | Rate since 16.05.13 | Rate since 11.06.13 |
| Liquidity provision | Standing facilities (fixed rates) | Overnight loans | 1 day | 8.25 | 8.25 |
| FX swaps (rouble rate) | 1 day | 6.50 | 6.50 | ||
| Lombard loans, REPO | 1 day, 1 week1 | 6.50 | 6.50 | ||
| Lombard loans | 30 days1 | 6.50 | 6.50 | ||
| REPO | 12 months1 | 7.50 | 7.25 | ||
| Loans secured by gold | Up to 90 days | 6.50 | 6.50 | ||
| From 91 to 180 days | 7.00 | 7.00 | |||
| From 181 to 365 days | 7.50 | 7.25 | |||
| Loans secured by non-marketable assets and guarantees | Up to 90 days | 6.75 | 6.75 | ||
| From 91 to 180 days | 7.25 | 7.25 | |||
| From 181 to 365 days | 7.75 | 7.50 | |||
| Open market operations (minimum interest rates) | REPO auctions | 1 day | 5.50 | 5.50 | |
| Lombard and REPO auctions | 1 week | 5.50 | 5.50 | ||
| 3 months | 6.50 | 6.50 | |||
| 6 months1 | 7.00 | 7.00 | |||
| 12 months | 7.50 | 7.25 | |||
| Liquidity absorption | Open market operations (maximum interest rates) | Deposit auctions | 1 week | 5.00 | 5.00 |
| 1 month1 | 5.75 | 5.75 | |||
| 3 months1 | 6.50 | 6.50 | |||
| Standing facilities (fixed rates) | Deposit operations | 1 day, 1 week1, 1 month, call | 4.50 | 4.50 | |
| Refinancing rate | 8.25 | 8.25 | |||
1 Operations have been suspended.
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