Tuesday, June 19, 2018

Russia's Central Bank may add crisis scenario to monetary policy

During a presentation to members of the federal government on Thursday, Russian Central Bank Chair Elvira Nabiullina disclosed that the bank may include a crisis scenario into its monetary policy draft.

The proposed crisis scenario would account for a rapid decrease Russian oil prices-- a consideration previously unaddressed in the stress scenarios of the draft policy, which spans through 2017.

"We are currently working out an additional fourth stress scenario, which implies a rapid, more significant decrease in oil prices during the forecast," Nabiullina said, according to Itar-Tass. "We consider the possibility of including the scenario in the draft at the next stage of development the main guideline."

Earlier versions of the draft policy contained three macroeconomic scenarios, including a projected rise in Urals oil to $104.80 per barrel from its current value of $95 per barrel. At $95 per barrel, Ural oil is presently trading at a lower value than anticipated by the three monetary policy scenarios.

Nabiullina expressed doubts that lowering the Central Bank's key rate to four to six percent will result in other banks' reducing credit rates to corporate clients. Central Bank increased its key rate three separate times during 2014. In July, the key rate was raised from 7.5 to eight percent and resulted in a nation-wide increase in interest rates to corporate borrowers, Itar-Tass reports.

Nabiullina further reported that Central Bank reserves the right to change the parameters of loan refinancing programs for investment projects. Adjustments could be made to any of the regulatory bank's refinancing instruments in order to "stimulate some sectors of the credit market, the development of which is restrained by structural factors," according to Itar-Tass.