Russia finance

By Vladimir Tikhomirov, BCS Financial Group

Russia’s central bank faces a dilemma at its monetary policy meeting on Friday. It stated when it hiked interest rates to 17 per cent last month – to their highest levels since 2003 – that this increase would be a temporary measure to defend the rouble. However, inflation stubbornly remains high, restricting the bank’s room to manoeuver.

Indeed, recent inflation data suggests that the new interest rate could stay for much longer. According to the official statistical agency, in December Russia’s consumer price index (CPI) jumped by 2.6 per cent month-on-month which is the highest level on record since the period of mid-1990s when inflation was running at unsustainable high double-digit rates. Read more

Photo: Bloomberg

Moscow’s stock exchange on Monday published the terms of its planned stock market flotation: it proposes to raise around $500m for the company and for the selling shareholders, putting a total value on the business of up to $4.6bn.

One striking point is the dividend pledge – “no less than” 30 per cent of the net profits for the year to December 2012, 40 per cent for 2013, and 50 per cent for 2014. Clearly the Russian authorities’ pressure for bigger payouts is yielding results. Read more