Russia’s central bank kept rates on hold on Friday – the 11th month in a row. Is that such a big deal?
Yes, argues Renaissance Capital’s Ivan Tchakarov. It should be cutting rates now. The bank’s doveish tone is all very well, but it should be acting on where it thinks inflation will go, not where it is currently.
It’s official. The Duma has confirmed Vladimir Putin’s pick, Elvira Nabiullina, as Russia’s next central banker with a vote of 360 in support, 20 against and one abstaining.
Nabiullina will be the first female central banker for a G8 country. But for investors the more important question is how dovish she will be when it comes to interest rates and economic growth.
Russia’s consumer spending spree could be ending in tears. A credit-fuelled surge has led households to rack up unprecedented levels of consumer debt – so much so that in 2012 some 80 per cent of new consumer loans (excluding mortgages) are going towards interest on existing debt. This cannot go on.
“In Russia, the macro-economic risks are small,” says Natalia Orlova, chief economist at Alfabank, “But the risks in the banking sector are accumulating. Retail lending is becoming a high-risk segment.”
Russia’s central bank kept its policy interest rates unchanged on Friday morning, as widely expected. But the non-event is worth noticing as it shows the Russian economy moving into its post-election phase – ie, one of slower growth.