The Bank of Russia expects the transition to the structural surplus liquidity in the coming months, said the head of the Central Bank Elvira Nabiullina during the international banking forum “Banks of Russia — XXI century”.
The head of the Central Bank cited statistics which shows the growing interest to place funds at the Central Bank, and not to involve them. In August the volume of Bank loans from the Central Bank declined by 11% to 2.4 trillion rubles. at the same time in 1,3 times increased the volume of deposits that the Federal Treasury has placed in banks. “As a result, the proportion raised from the Bank of Russia funds in Bank liabilities decreased over the month from 3.4% to 3%, and funds of the Federal Treasury, respectively, increased from 0.8% to 1%” — quoted Nabiullina “Interfax”.
The formation of structural surplus liquidity encourages the development of high-risk sectors of the credit market, the Chairman of the Central Bank. “We are concerned about the risk of possible rapid growth in unsecured consumer lending, which could slow down the process of reducing inflation,” she said.
In August, loans to individuals rose more-than-loans to enterprises — excluding foreign exchange revaluation of 0.8% and 0.2%, respectively. “And such a structure of growth of loans has more proinflationary than if the loans to companies to support a new proposal, in other words, new production would grow faster than to support consumer demand”, — said the Chairman of the Central Bank.
Nabiullina also said that when you move to a structural surplus of liquidity, there is an automatic monetary easing, and the key rate becomes a benchmark for rates of placement of funds, not interest rates to attract funds. “The changing role of the key interest rate essentially equivalent to its reduction. However, the key rate in any case remains an anchor for other rates in the money market”, — said the head of the Bank of Russia.
According to the chief economist of “Renaissance Capital” Oleg Kuzmin, the transition to surplus liquidity, ceteris paribus would lead to lower money market rates 30 basis points. Chief economist at PF Capital, Evgeny Nadorshin expects the rate of one-day rouble credits RUONIA (indicative weighted ruble Deposit rate “overnight” the Russian interbank market RUONIA reflects the cost of unsecured borrowing by banks with minimal credit risk), which is 10,21%, will increasingly fall to the lower boundary of the rates of involvement of the Central Bank (now 9.5 percent).
The timing of the transition to the structural surplus liquidity depend primarily on the intensity of an expenditure of means of the Federal budget, said Nabiullina.
In the review of the Bank of Russia banking sector Liquidity and financial markets”, published on 9 September, indicated that the Central Bank in September is expected to decline slightly the needs of banks for refinancing of Bank of Russia. In future with the reduction in the liquidity deficit may increase the frequency of holding Deposit auctions.
The regulator notes that the impact of fiscal operations on liquidity of the banking sector decreases due to the increase of the norms of compulsory reserves by 1 percentage point on liabilities in foreign currency from 1 July 2016. “The need to maintain on accounts with the Bank of Russia additional funds led to the increase in banks ‘demand for liquidity”, — said the Central Bank.