ARB: high key rate is slowing lending to the economy

ARB: high key rate is slowing lending to the economy

MOSCOW, January 22. High key rate is a brake on lending to the economy and an obstacle to low inflation. This opinion was expressed at a press conference the head of Association of Russian banks (ARB) Garegin Tosunyan.

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“We believe that the key rate should be decreased. It is unlikely that someone from the banking community would be calling for a rate increase. High rate is a brake on our economy, it is necessary to reduce, and the primary mechanism of decline is competition and monetary policy,” he said.

According to Tosunian, lending rate for business at over 20-30% per annum is also a kind of freeze of lending to the economy. “It’s hard to find a business who is willing to take these bets,” said he.

The head of the ARB believes that it is impossible to achieve low inflation and economic growth, if you hold the key a two-digit rate.

The intervention of the Central Bank in the currency market

Tosunyan believes that administrative intervention in the ruble should not go. Restrictive measures for the ruble exchange rate can lead to negative consequences, he said.

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“Can’t agree that Russia should set a fixed exchange rate such as 70 cents on the dollar, as in the USSR. I think the leadership of the country will not go to the imposition of restrictive measures for the ruble”, – he said.

According to Tosunian, currency interventions of the CBR also does not solve the problem of exchange rate, since they are mostly played by speculators.
To support the ruble, it should “detach” from the dependence on oil prices, said the head of the ARB. “The oil price is more a political factor than economic. The price of oil needs to define more General economic situation that is happening in the economy how credit market,” said Tosunyan.

In his opinion, the ruble is undervalued because of the hysteria and orientation in oil prices.