The preferential mortgage program was introduced during the pandemic, but then for some reason they forgot to cancel it.
Photo: Yulia PYKHALOVA
On Friday, the Central Bank announced that the key interest rate will remain at the same level: 16% per year. The president of the Central Bank, Elvira Nabiullina, gave the traditional press conference. We talk about the most interesting statements by the head of the Central Bank.
Inflation slowed, but did not stop
All of these key gambling games are important for exactly one reason: they should lead to a slowdown in the rate of price growth. The Central Bank’s goal is to keep inflation low in Russia. About half of what it is now.
– In December and January we observed a significant slowdown in the growth of current prices. It was stopped in February, but, according to preliminary estimates, it resumed in March. However, it is too early to judge the future speed of disinflationary trends. And we continue to believe that it is necessary to maintain tight monetary conditions for a long time. This will allow inflation to return to 4-4.5% by the end of this year and be on target in the future,” said Elvira Nabiullina.
With the help of the key rate, the Central Bank corrects the imbalance between supply and demand. The first went off scale and the second fell behind. The high cost of borrowing and, at the same time, good profitability on deposits should balance supply and demand.
Investment activity is growing
The Central Bank is very often accused of slowing down the economy. They say high rates kill investment activity. Who will accept money for development at such “exorbitant” interest rates? But for some reason they accept it.
– Investing activity is at a record level. The production of investment goods has reached historically high volumes. Investment imports are growing. Our regional offices report an increase in the proportion of companies that have increased their plans to expand production. The economy is in the growth investment phase. This is one of the manifestations of structural transformation,” Nabiullina explained.
The explanation here is simple. First of all, many companies invest their own funds in development. That is, they do not attract loans for this. Secondly, even if some borrowed money is required, it is often obtained at a floating interest rate. Therefore, as soon as the key loan starts to decline (and this process will probably start in the second half of the year), similar loans will start to get cheaper. A company that invests in development does not look at what the current rate is, but at what it will be in the next 3 to 5 years.
President of the Central Bank Elvira Nabiullina
Photo: GLOBAL LOOK PRESS
It is true that there is another limitation on business investment that the Central Bank cannot influence: staff shortages.
– Unemployment fell to 2.7% in January, seasonally adjusted. Tensions in the labor market have resumed growth. According to surveys carried out among companies, the greatest deterioration in the personnel situation occurs in metallurgy, the pharmaceutical industry, the chemical industry and mining. Under such conditions, companies’ competition for workers is growing. This, as a rule, does not lead to a significant increase in the volume of goods and services, but to an increase in prices, says Nabiullina.
That is why the Central Bank is in no hurry to lower the official interest rate.
Prime mortgages should be reduced
A very striking example of the imbalance between supply and demand in a particular market is real estate prices. Especially for new buildings. They have almost doubled in recent years. The reason for this is the preferential mortgage program. It was introduced during the pandemic to support developers. But then for some reason they forgot to cancel…
– Regarding preferential mortgages, our position is that the broad non-targeted program should expire in the summer and not be renewed. And we have always supported specific programs, including family mortgages,” Nabiullina said.
President Vladimir Putin, in his speech to the Federal Assembly, extended the family mortgage until 2030 and suggested that preferential mortgages with state support should be modified and made more targeted. Now everything is in the hands of the government: exactly what parameters will be included in the updated program.
A very striking example of the imbalance between supply and demand in a particular market is real estate prices. Especially for new buildings
Photo: Mikhail FROLOV
Qiwi Bank has money to pay depositors
One of the most notable events of last month was the bankruptcy of the first bank (Qiwi Bank). The Central Bank warned this several times. The bank was involved in shady dealings, transferring money to cryptocurrency exchangers, illegal casinos and betting houses. And he actively circumvented the Central Bank’s restrictions. I paid for this. True, as a result of this, the bank’s clients suffered. And if up to 1.4 million rubles are returned to depositors, the insurance system does not cover the money in Qiwi wallets. But, as the Central Bank assures, the bank has sufficient funds in its accounts to pay all clients.
– Conclusion based on the results of the work of the temporary administration of the Deposit Insurance Agency: the bank has a significant surplus of funds – more than 28 billion rubles, that is, the excess of its assets over its liabilities. Therefore we proceed from the fact that all existing obligations will be fulfilled,” Nabiullina explained.
An unpleasant precedent with stocks
When the shares of foreign companies are blocked by a hostile country, this can still be understood (although not forgiven). But when your own Attorney General’s Office takes money from private investors in a 30-year-old case, it’s time to think about it. Recently, the Arbitration Court of the Perm Territory fully satisfied the claim for the seizure of shares of the Solikamsk Magnesium Plant (SMZ) from private investors. This is the first such decision in the history of modern Russia. About two thousand investors could be affected.
That’s how it was. The Prosecutor General’s Office proved in court that the privatization of SMZ in 1992 was illegal. Therefore, the production of ferroalloys returned to state property. 90% was in the hands of the main owners. They were confiscated. But the company was listed on the stock exchange. Therefore, the Prosecutor General’s Office demanded that the remaining 10% be confiscated from private owners who bought these shares not during privatization, but later on the stock exchange. This precedent greatly worried the Central Bank.
– Regarding the precedents of seizure of shares from minority shareholders who acquired them in organized auctions, of course we are concerned about this situation. Because it is a very important factor that affects the confidence of retail investors in the stock market. If we want to attract resources for development and, among other things, take advantage of capital market opportunities, of course maintaining this trust is very important. This situation worries us, we will see what else we can do here,” explained Elvira Nabiullina.
The next meeting of the Board of Directors of the Central Bank on monetary policy is scheduled for April 26.
