|11-10-2014, 01:06 PM||#1|
Central Bank of Russia cuts growth forecasts, pushes inflation target to 2017
The Central Bank of Russia trimmed its economic growth forecast for 2015, expecting oil prices to average around $80 a barrel and sanctions to take a further toll on its economy and businesses.
In a revised monetary policy plan for 2015-2017, the central bank cut its 2015 growth forecast and delayed its inflation target, expecting consumer price growth to hit 4% in 2017 from 2016. The bank also sees sanctions lingering till the end of 2017.
Over the period between 2015 and 2017, Russian banks will be able to adjust to the changes in external conditions, considering the sanctions, adapt their focus on internal borrowing sources, and will also have access to Asian capital markets
“Bank of Russia will maintain tight monetary policy only while there are significant risks of rising inflationary expectations amid unfavorable external political and economic trends,” First Deputy Governor Ksenia Yudaeva said.
The regulator’s decision to hike its key interest rate this year has helped contain the decline in Russia’s currency, the ruble, against the dollar. Yudaeva said the fall would have been 10% stronger if the action had not been taken.
The currency has fallen over 28% versus the U.S. dollar this year, second only to Ukraine’s hryvnia in the worst performing currencies.
The ruble gained 2.18% to 45.499 against the dollar as of 09:12 GMT.
The central bank’s decision to limit ruble liquidity to banks will not only play a part on the foreign exchange market, but it will help domestically as it is used for financing the economy.
Although this might hamper the efficiency of doing business in Russia, President Vladimir Putin said earlier today that the Industry Development Fund, a new mechanism for project financing, is entering its final stage and will be ready next year.
The Industry Development Fund will help the granting of loans to enterprises on the stage of per-banking financing.
Inflation for this year will possibly reach 8%, but Russia’s government could help slow it down if it lifts the ban on food imports that placed sanctions on Russia.
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