The reduction of the key rate following the meeting of the Board of Directors of the Bank of Russia made up one standard step — now it is equal to 4.25% per annum. Over the unfulfilled expectations of stronger reductions are good news: the economic forecast of the Central Bank improved, the regulator does not expect a further decline in domestic demand collapses part of the mechanisms of extra support in the foreign exchange market, is confident in the stability of the budget situation for the coming years and expects rather more intense than previously thought, post-crisis recovery in the coming months. This recovery now looks possible without ultra-cheap money.The Board of Directors of the Bank of Russia took a decision on the next decrease in discount rate and clarify the macroeconomic forecast until 2022. The decision was expected, all except for the step of reducing: the Central Bank, which basically was waiting for rate changes by 0.5% (two steps), limited reduction in only one step — by 0.25 percentage points to 4.25% per annum. On a press-conferences the head of Bank of Russia Elvira Nabiullina has paid attention to the logic of this decision: in previous Council meetings they talked about “the decisive reaction of monetary policy in response to shocks”, in July as the Central Bank returns to a previously adopted policy of gradual rate changes. The head of the Central Bank even called the decision “fine tuning” of monetary policy (DCT). Nevertheless, it is clear that the new drastic action — at least in the absence of new negative circumstances — the Central Bank to take no need. After a severe uncertainty of the spring—summer 2020 this seems like a fundamentally positive news.The adjusted forecast of the Central Bank until 2022 already quite different from April, although its basic version still looks very conservative. So, formally, the Bank of Russia believes that in 2021 inflation will most likely not return to levels of “target” — according to the forecast, in an average year, it will be equal to 3,3–4%. The Central Bank is not concerned about inflation below the target for the next year, with his point of view, it is mainly a technical effect, after the failure of the prices in the first half of 2020.The Bank of Russia does not expect any more in 2020 or in 2021 of a zero current account: the built-in forecast low oil prices ($38 per barrel in 2020, $40 in 2021 and $45 in 2022, that is, the Central Bank provides the non-formal “cutoff price” the budget rule for one and a half to two years) the balance will remain positive.So, the Bank of Russia will not sell all the currency in the framework of the “budget rule” associated with the transaction for the sale of the government savings Bank. It is anticipated offsetting nedoprodannye balance with the amounts of all deferred from 2018 purchases of currencies and proactive sales (March—April 2020). Balance all transactionsputs (ruble equivalent) of 185 billion rubles, the currency will be sold in the fourth quarter of 2020 in the market along with the currency sold in the ordinary course of operations on the budgetary rule. After three months of additional sales less than $1 billion a month history of currency interventions of the Central Bank will be finally closed, promises the regulator.In the new version of the forecast of the Central Bank included the parameters of the budget policy for the years 2021-2023, which were announced earlier by the Ministry of Finance,— as a fact: in 2022 Russia will return to a primary budget deficit at 0.5% of GDP and the budget rules. The process of returning to the rule of the Bank of Russia, as the Finance Ministry prefers to call “fiscal consolidation”. Note that an exact match in oil prices the forecast of the Central Bank within two years at least Federal spending should be somewhat reduced, but in General traces of the influence of this process on macroeconomic indicators in the forecast of the regulator no. Central Bank expects that after the decline of the GDP by the end of 2020 at 4.5–5.5 percent in 2021 it will grow to 3.5–4.5% in 2022 — by 2.5–3.5%. Essentially, it is the expectation that a return to the “decolonialism” indicators will take a year and a half, by the beginning of 2022, the process will be largely completed. An important change in the forecast — the Bank of Russia is now waiting for year-end no failure in the credit of individuals, but growth of 4-5%, with continued expectations of high rate of household savings.This, of course, is not V-shaped recovery scenario as such, but the meaning is not too far from it Laggards. Especially when you consider that the current “crisis” for Russia, not so much a “coronavirus” as “oil”, and the recovery rate is mainly determined by the demand in foreign markets, not domestic economy. Comments of the Central Bank do not contain special clauses regarding the second wave of the pandemic, but the Bank of Russia with a large clearly does not believe in her ability, apparently considering the good prospects of rapid vaccination and willingness to quickly stop a secondary outbreak. That this recovery will be very simple and uncomplicated, the Central Bank is not ready to believe — “the path of further economic recovery may be unstable due to the event falling income, cautious consumer behaviour, cautious business sentiment, as well as restrictions imposed by external demand”, – stated in the message controller. But neither of the distribution in world and Russian economy and significant secondary effects of the events of March—June, no further radical change in the trajectory of economic growth the question. A year and a half everything will be back to where it was in the beginning of 2020, the working hypothesis of the Bank of Russia to simplify this formulation.Elvira Nabiullina also has announced a major long-term the news of the forecast of the Central Bank, directly it is not specified. In nominal terms, the neutral range (notional, not directly observed and non-billable a long-term level of the key rate, with a steady deviation from the rates “up” the monetary policy of the Central Bank is considered hard and soft) is estimated, the Central Bank of 5-6%. This technically changes nothing in the definition of the DCT as “soft” now and does not limit it in further lower rates. But, on the one hand, it gives a slightly different meaning to the summer reduction of the key rate in four steps, on the other — demonstrates that a significant further easing of monetary-credit policy in the current environment is not necessary and unlikely, supercheap money in the economy if the current policy of the Bank of Russia is expected.Dmitry Butrin
