Latest news with #Sovkombank
Reuters
02-06-2025
- Business
- Reuters
Russian central bank seen keeping key rate on hold at 21%
MOSCOW, June 2 (Reuters) - Russia's central bank will keep its key interest rate on hold at 21% at its board meeting on June 6, but may soften its rhetoric and signal rate cuts later in the year, a Reuters poll of 26 economists showed on Monday. Seven economists expected a rate cut this week, but the majority pointed to still rising household inflationary expectations, which are closely monitored by the central bank, as well as geopolitics, as obstacles to an early cut. "The geopolitical factor and the state of the global economy remain the main sources of uncertainty. The decline in oil and commodities poses risks of a weaker rouble and higher inflation," said Sovkombank's chief economist Mikhail Vasilyev. Russia and Ukraine held their second round of peace talks on Monday, but the two sides are still far apart on how to end the war and the fighting stepped up ahead of the negotiations. Natalya Orlova from Alfa Bank cited the rise in inflationary expectations, low unemployment, and increased risks to the budget as the main factors in favour of keeping rates unchanged. "I believe that the transition to a rate cutting cycle is better postponed until the fall, when the picture of food price dynamics in the new season becomes clearer," Orlova said. In the poll, the forecast for inflation this year was unchanged from the previous poll at 7%, while gross domestic product (GDP) growth was seen slightly lower at 1.5% compared to 1.6% in the previous poll. The rouble, which has rallied by over 42% against the dollar this year mostly on expectations of a peaceful settlement in Ukraine, is seen weakening to 97.5 to the U.S. dollar in one year compared to 95 to the dollar in the previous poll. The rouble's rally, which has taken place despite a fall in prices for oil, surprised many analysts, but has also helped the central bank in fighting inflation as imported goods are becoming cheaper.
Reuters
31-03-2025
- Business
- Reuters
Russian rouble seen weakening back to around 100 to the US dollar in a year
MOSCOW, March 31 (Reuters) - The Russian rouble is seen weakening back to the level of around 100 to the U.S. dollar in one year from now, following a rally at the start of this year, a Reuters poll of 18 economists showed on Monday. The rouble has strengthened by about 25% in 2025 against the dollar this year, mostly on expectations of easing geopolitical tensions between Russia and the U.S., which started talks in February about a potential peaceful settlement in Ukraine. A strong rouble can widen Russia's budget deficit in 2025, forcing the government to borrow more than it planned. The rouble is currently about 12% stronger than the level assumed in the budget. Analysts saw the rouble weakening to a median of 97 to the dollar by the end of September from the current level of about 85. The rouble was set to weaken further to 100 one year from now, although in the short term it will remain strong. "We believe that in April the rouble exchange rate will remain strong and trade close to current levels, although much will depend on the development of the geopolitical situation," said Kirill Sokolov from Sovkombank. Natalya Orlova from Alpha Bank argued that the geopolitical factor was hard to predict, and that even if relations between Russia and the U.S. improve, easing sanctions and increasing Russian export volumes to global markets will take time. "In our opinion, the main phase of the rouble's strengthening has ended, but there are not yet enough reasons for its significant weakening," Orlova said. In the previous poll analysts saw the rouble at 105 to the dollar in one year. Analysts said the central bank will keep its key interest rate on hold at 21%, the highest level since the early 2000s, at its next rate-setting meeting on April 25. They saw the regulator cutting the rate to a median of 20% in the second quarter. "We believe that the cycle of monetary policy easing may begin at the meetings in June-July," said Sokolov from Sovkombank. Some analysts expected the regulator to start cutting rates in the second half of the year. "It is important to understand that the full set of data needed for the regulator to move towards lowering the key rate will not be available before the July meeting," Gazprombank's analysts said. The analysts cut their full-year inflation forecast to 6.8% from 7.0% in the previous forecast. The full year economic growth forecast remained unchanged from the previous poll at 1.7%.
Reuters
17-03-2025
- Business
- Reuters
Russian central bank expected to keep key rate on hold amid uncertainty
Summary All 29 analysts in the poll see key rate on hold Geopolitical uncertainty seen as major risk Rouble rally seen helping to fight inflation MOSCOW, March 17 (Reuters) - The Russian central bank will keep its benchmark interest rate on hold at a board meeting on March 21, all 29 analysts who took part in a Reuters poll predicted on Monday, since more time is needed for inflation to respond to the tight monetary policy. Despite the key rate being at its highest level in over 20 years, a slowdown in corporate and retail lending, and a rally in the rouble, inflation remained stubbornly high at 10.1%, well above the central bank's target level of 4%. The rouble surged by 26% since the start of the year, mainly on expectations of a peace settlement in Ukraine. This surge followed talks initiated by the new U.S. administration, but analysts said uncertainty risks were too high. "The geopolitical factor remains the main source of uncertainty for the forecast," said Mikhail Vasilyev from Sovkombank. The rouble rally could help to bring down inflation rates if the Russian currency stays at its current levels long enough for the exchange rate to have an impact on prices of imported goods. The central bank said on March 11 that tight monetary policy would need to be maintained for a long time in order to bring about persistently low inflation, stressing that the normalization of budget policy was crucial. Soaring government spending pushed Russia's budget deficit to 1.3% of gross domestic product (GDP) in the first two months of 2025 compared with 0.6% of GDP in the same period last year and well above the 0.5% of GDP target level for 2025. "The central bank does not have sufficient reasons to lower the rate, price growth remains high despite the strong rouble and slowdown in lending," said Maxim Petronevich from Rosselkhozbank. "However, there are no reasons to raise the rate either, as the intermediate goal of slowing the lending market has already been achieved, while more time is needed to achieve the ultimate goal of reducing price growth," he added. Speaking ahead of the board meeting on March 1, Kirill Tremasov, adviser to governor Elvira Nabiullina, described the current situation as a "breaking point," saying that board members usually have widely varying views in such moments. "Therefore, I would not be surprised if at the March meeting we consider both a rate cut and hear voices advocating for a rate increase," Tremasov said. Some analysts shared this view, highlighting uncertainty. "Changes in external factors can significantly influence the policy of the central bank in either direction," Gazprombank's analysts said. They expect that the rate-cutting cycle may not start until June or July.
