On 28 October, the Central Bank left the key rate at 10% and confirmed the intention not to return to the question of its decline earlier than 2017, reports TASS.

“To consolidate the trend towards a sustainable reduction of inflation, according to Bank of Russia estimates, it is necessary to maintain the current level of the key rate until the end of 2016, with the possibility of its reduction in the first or second quarter of 2017″, – stated in the comments of the regulator following the meeting of the Board of Directors of the Bank of Russia.

Analysts say the tone of this comment hard enough. The decision takes into account the need to maintain the current level of rates before the end of this year to consolidate the trend towards a sustainable reduction of inflation.

Central Bank stressed that the current slowdown in consumer prices was largely due to temporary factors, such as good harvest, which contributed to the slowdown in prices of foodstuffs and the decline in inflation expectations remains fragile.

“Taking into account the adopted decisions and maintain a moderately tight monetary policy, the annual growth rate of consumer prices will be less than 4.5% in October 2017 and will fall to the target level of 4% at the end of 2017″, – believe in the Bank of Russia.

Risks remain that inflation in Russia will not reach the target level of 4% in 2017. The dynamics of the ruble makes a significant contribution to the reduction of inflation, however, the persistence of risk is mainly related to inertia in inflation expectations, the possible weakening of incentives for household savings and the rise in real wages which is not accompanied by productivity growth.

At the previous meeting of the Board of Directors of the Central Bank on 16 September was accepted the decision to lower the key rate by 0.5 percentage points, to 10% per annum. At the same time the regulator first announced its plans for the time frame in which he will be able to change the key rate (not before the “first or second quarter of 2017″). Analysts do not doubt that the Central Bank will remain faithful to his word.

So, all 11 analysts surveyed by news Agency TASS on the eve of the meeting of the Board of Directors, assumed that the key rate will be maintained at the same level. The consensus forecast of RBC on the eve of the meeting showed unanimity: all analysts interviewed (21 people) agreed that a rate cut in October will not.

The key rate was introduced in September 2013 with the transition to the inflation targeting regime of the Central Bank. Is the interest rate at which the Central Bank of Russia provides loans to commercial banks in debt for one week, and at the same time the rate at which the Central Bank is willing to accept from banks deposits funds. It plays a crucial role in setting interest rates on Bank loans and the impact on inflation and the cost of funding of banks.

In the recent past, the Central Bank had intended to gradually adjust the level of the refinancing rate (the percent annually for loans provided by Central Bank to banks and non-Bank credit institutions) to the key rate by January 2016, after which to make the refinancing rate, which is tied to many indicators of financial statistics and ratios the monetary policy of the Central Bank, the key.

However, as evident from the published in December last year, government regulations, from 2016 all government documents, the refinancing rate of the Central Bank, on the contrary, was replaced by key.

The Russian Central Bank leaves key rate unchanged 04.11.2016

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