Raising the key rate of the fed can have a positive impact on the Russian stock market, Russian analysts believe. The experts also noted that this decision does not strengthen the ruble.
MOSCOW, 17 Dec. The decision of the US Federal reserve about to raise the key rate taken the day before, a positive attitude will support the Russian stock market, while it will not strengthen the ruble, but this decision has yet to comprehend, I think the financial authorities of the Russian Federation and Analytics.
The open market Committee of the Federal reserve system (FRS) the USA following the results of the next meeting for the first time since 29 June 2006 has raised the benchmark interest rate to 0.25-0.5% per annum with a record low of 0-0,25%. Thus, the mean value at the base interest rate is the 0.375% per annum. The rate rises from 17 December. The regulator’s decision has coincided with expectations of experts.
Later in the press conference the head of the regulator Janet Yellen stated that the fed plans to increase the base rate to 1.5% in 2016 and 2.5% in 2017, but it will depend on the economic situation.
At the same time, the fed maintained the growth forecast of the economy in 2015 at 2.1%. The inflation forecast for the current year is confirmed at 0.4%. The unemployment forecast has not changed and amounted to 5%.
Stability will be preserved
The head of the Ministry of economic development Alexei Ulyukayev is sure that the fed decision will not seriously increase the volatility of the ruble exchange rate and will not create additional shocks to macroeconomic stability in Russia.
“Of course, the fed’s decision will affect everyone. 80% of analysts believed that the decision to raise rates the fed will be made. I think this was large, all expected, all prepared to enter into forward contracts and so forth, and this is taken into account in futures contracts on oil and other contracts,” he said.
“So I don’t see any potential for serious macroeconomic shocks for Russia and the ruble”, — concluded the speaker.
First Deputy Chairman of the Central Bank Sergey Shvetsov said that he did not expect such a clear signal from the fed, and the market should reflect this. However, he believes that positive for the Russian market from the fed rate hike more than potential threats.
The former head of the Ministry of Finance, the head of Committee of civil initiatives (THD) Alexei Kudrin said the decision of the American regulator timely.
Positive for the market
Analysts of investment banks and the financial market experts believe that in General, the decision of the fed will have a positive impact on the Russian stock market, but the relatively low price of oil will continue to be a deterrent to growth.
“Overall, we expect a positive market reaction this morning (including, perhaps, the sigh of relief). Our analysts at the foreign exchange market believe that in the short term the dollar may slightly weaken. This will have a positive impact on the ruble exchange rate, however, this is unlikely to compensate for the drop in oil prices over a long period of time,” say analysts at Sberbank CIB.
Managing Director of the investment Department of VTB24 Stanislav Kleschev said that the markets ‘ reaction to a rate hike was not expected by the experts of the Bank.
“We waited for the beginning of the normalization policy of the fed will signal for closing of previously accumulated long positions in the dollar and short raw material. In this part the results of the night trading session came as a surprise: the dollar firmed against other currencies, while raw materials continued to fall in price”, — he said.
“We expect that after the us (S&P500 gained 1.5%), a positive pulse will be given and the stocks of Russian companies. And, of course, the focus will continue to focus on the dynamics of quotations”, he concluded.
The main analyst of Management “Savings” Alexander Potavin stated that the traditional view that increasing the rate leads to an outflow of funds from emerging markets, most likely, are not met.
“We have no confidence that the current shift in monetary policy will lead to strong movements of capital in relation to Russia. In the last 1.5 years our debt market lived mainly at their own expense and was somewhat isolated from global trends due to financial sanctions against the Russian Federation. The increase in yields until you go beyond the range of monthly values,” he said.