Vedev estimated whether to expect a “pleasant surprise” from the Central Bank at the end of the year
The expert said that by the end of the year, the Russians “will not see” the key rate at 12% per annum, but the Central Bank may reduce the level by 25 basis points
Former Deputy Minister of Economic Development of Russia (2014-2017) Alexei Vedev said that it is not worth waiting for a “pleasant surprise” from the Central Bank in the form of a key rate reduction. He said this on Radio RBC.
No, I don’t think we’ll see a pleasant surprise from the Central Bank. Well, 25 if... As if you are satisfied in the second quarter in a total of 25 basis points, the expert said.
According to him, by the end of the year, Russians “will not see” the key rate at 12% per annum.
Initially, my vision was that 2026 is quite challenging and we will adapt to the economy. Cheaper money is emerging in order to reach more or less stable growth in 2026-2029. But it is already clear that 2027 will be as difficult as 2026, with expensive money, low investment activity, and low business activity. That, of course, is a minus... But why not do anything when there are quite tipping trends in the economy — I, of course, not very clear, — said Vedev, commenting on the preservation of the rate.
The former Deputy Minister of Economic Development said that today he expected the Central Bank to reduce the key rate by 25 basis points with a positive outlook for both the financial market and the economy.
According to him, despite the current “braking” of the Central Bank in reducing the level of the key rate, it is still worth waiting for it at the level of 12%.
If you remember, the Ministry of Economic Development, starting from 2015, introduced the formula for tariffs “inflation minus”. That is, with a target of 4%, none of the tariffs can grow above 4%. And in 2015, the indexation was 2-3%, of course, inflation immediately slowed down. The second, of course, is the wage race. On the one hand, this is good, on the other hand, it is, of course, pro-inflationary pressure, and most importantly, it is growing business costs. That is, more and more money is spent on wages, less and less of their own funds for investment. All these structural changes, of course, lead to the suppression of economic growth and to the preservation of inflation at a high level. Here, the key rate, which, in my opinion, is now at such a sky-high level, is an obvious brake, Vedev concluded.
Today, the Board of Directors of the Bank of Russia left the key rate unchanged at 14% per annum. A similar decision was made at the September meeting, the first pause in monetary easing (MEP) in more than a year. At the same time, the new decision to maintain the key rate of the Central Bank accompanied the emoji kitten with a sword.
