MOSCOW, November 2. The Bank of Russia considers it possible to develop the principles of lending in the economy, in which banks would lend to the industry, making a real contribution to the GDP growth, instead of crediting the financial transactions. This was stated during the parliamentary hearings in the state Duma first Deputy Chairman of Bank of Russia Dmitry Tulin.
Now before monetary policy of the Bank of Russia first and foremost task of inflation targeting, which is reflected in the achievement of the inflation to 4% in 2017. Tulin explains that price and financial stability are necessary conditions for GDP growth, which is the aim of economic policy.
“Using a rich global practice and our own developments, you can find ways, and this can cooperate all interested persons, the expert community and all branches of government, in order to find a solution – how, economic or non-economic, voluntary or voluntary-compulsory to induce our credit institution to guide credit resources to where they are interested to guide the country, the people,” said Tulin.
First Deputy Chairman of the Central Bank reminded that from the point of application of the credits depends on economic growth. “The effect of certain loans on the economy is different. If banks lend to commercial production, GDP grows automatically… If banks provide loans to purchase of financial assets, whether currency or mergers and acquisitions, or even lending to stimulate imports of durable goods, production (GDP) does not grow”, – explained Tulin.
The volatility of the exchange rate
He also noted that the Bank of Russia considers it impossible to overcome the volatility of the exchange rate.
“It is impossible to overcome the volatility of the exchange rate. I wish it was stable, but this will not happen,” he said. The first Deputy Chairman explained that the volatility associated with the value of the coefficient of localization of production, even for export-oriented domestic market is 50%. “Half of the cost of production is imported components and parts,” he explains.
“With this volatility, instability, leads to symmetrical one-sided inflationary impact on domestic prices. That is, when the exchange rate falls, domestic prices increase sharply, when he wins back his position, even completely, slowing growth,” said Thulin, noting that it “complicates our ability to conduct anti-inflation policy”.
Earlier, representatives of the Bank of Russia has repeatedly stated that in the coming years, the ruble exchange rate in connection with the transition to free floating will be somewhat more volatile than until November 2014.
Thulin noted that monetary conditions should be not too soft and not too hard.
Soft conditions characterized by low or even negative key interest rate of the Central Bank and, therefore, wide opportunities for residents cheap loans, hard aimed at increasing the value of money in the economy.
“Monetary conditions should not be too soft and not too hard. And quantitative parameters of the DCT must match the readiness of the real sector of the economy use money for the purpose of commodity production and commodity turnover,” he said.
Tulin gave the example that “if, for example, a shipyard has to fill with money from a helicopter with a thick layer of bills, a larger number of ships they won’t release” because they do not have enough labor and production within this particular company. “Too hard the OST can artificially retard economic growth, lead to mass bankruptcies, until the destruction of entire industries,” – said the first Deputy Chairman.
On Friday 30 October, the Bank of Russia took a decision for the second time in a row to keep the key rate at 11 percent, prompting criticism from business, which is expected to cut rates by 0.5 percentage points While the regulator has given a clear signal to the market about the rate reduction at a future meeting.