The Central Bank will increase the interest rate to 23%: consensus forecast RB.RU

Consensus forecast

• Alfa-Bank – 23%
• Sberbank – 23%
• VTB – 23%
• “SDM-Bank” – 23%
• Sovcombank – 23%
• “Finam” – 23%
• Broker credit service – 23%
• “Russian standard” – 23%
• “Mental money” – 23%
• Consensus forecast: 23% annually

Rodion Latypov, chief economist of the VTB group The decision expected in December is assumed to be a compromise between the acceleration of current inflation rates in November and a significant slowdown in aggregate credit in November.

The last time the rate was raised was on October 25, by 200 basis points, to 21%, which became an all-time high. The president of the Central Bank, Elvira Nabiullina, explained the decision as an attempt to stop inflation, which is growing faster than expected, and to reduce demand, which is growing faster than supply. At the end of December it was not possible to cope with inflation, but credit began to decline, experts interviewed by RB.RU said.

Analysts admit that the Central Bank could make a stricter decision: increase the rate even to 24-25% per year already in 2024. For example, this opinion is shared by experts from Alfa-Bank, Finam and Russian Standard.

“At the end of October, the Central Bank did not rule out an increase to 23%, but its inflation target was 8% to 8.5%. It is now clear that annual inflation, in my opinion, will approach 10%. And this means that there should be an adjustment similar to the movement of the rate,” he explained. Chief Economist of Alfa-Bank Natalia Orlova.

The acceleration of price growth and the stable inflationary expectations of economic agents are factors that favor such a decision, he adds. Director of the Department of Operations in Financial Markets of the Russian Standard Maxim Timoshenko.

At the same time, analysts consider the option of reducing the rate in December unlikely due to the “acceleration of inflation.” Vice Chairman of the Board of Directors, Head of Treasury of SDM-Bank Eduard Lushin suggests that the weakening of the ruble last fall is only beginning to penetrate the inflation figures, and could be even greater.

How will the rate increase affect businesses?

Olga Belenkaya, head of the Macroeconomic Analysis Department of the Finam Financial Group He added that companies are concerned that a key rate above 20% and even higher rates for new market loans could lead to excessive “hypothermia” of the economy or even a recession.

“The realization of credit risks due to the deterioration of the financial situation of borrowers also threatens banks. “It is likely that the Central Bank will also take these risks into account,” the analyst added.

According to Orlova, the high interest rate is negative for small businesses that have recently started using leverage. For them, such a long period of high rates became a test in the financial sense. Large and medium-sized companies cope better, adds the expert.

Yulia Khandoshko, CEO of European broker Mind Money (formerly Zerich)argues that lending to small businesses through private banks is becoming virtually impossible. Even before the rate increase, banks were reluctant to provide loans to small businesses due to high risk, but now the situation has worsened even more, businesses will have to create financial reserves and increase the prices of their goods and services, believes the expert.

Difficulties may also arise for large companies. “Although companies are on a level playing field, some receive preferential treatment. Naturally, if a company has the support of the government, it will be easier for it to face the current difficulties. But even for subsidized companies, a high rate will not bring tangible benefits,” Khandoshko said.

According Amarkets leading analyst Igor RastorguevThe new increase will not have a significant effect on companies, since loans on market conditions are already inaccessible to most companies.

“If a company cannot obtain a loan at 25%, then at 30%, or even more. This rate is higher than the profitability of many companies,” added the specialist.

Ilya Fedorov, chief economist of BCS World of Investments expects economic growth close to zero by the end of 2025.

At the same time, small businesses are already trying to adapt. For example, the founder of the Russian thermal resorts of Baden-Baden, Evgeniy Kononov, hopes that an increase in the key tariff will attract Russians to domestic resorts.

When will the rate start to drop?

Analysts did not agree on when the interest rate could be reduced, but in any case this will not happen in the first half of next year. Russian Standard’s Tymoshenko believes that a rate cut cannot be expected before the second half of 2025. Orlova is also confident that a rate cut cannot be expected before mid-2025.

Senior Analyst at SberCIB Investment Research Igor Rapokhin believes that it will only be possible to talk about reducing the rate in 2026. “The Bank of Russia will also raise the rate to 25% in February and maintain it throughout 2025. The rate cut is likely to be delayed until 2026,” adds the expert. .

Ilya Fedorov, chief economist of BCS World of Investments expects the key rate to drop to 13% by the end of 2025 as economic growth slows to near-zero levels due to cuts to the credit boost and a balanced budget next year.

Analysts believed that under current conditions they expect extraordinary and regulatory decisions from the authorities, and not just an increase in the key interest rate in an attempt to curb inflation.

“Maybe we will see some atypical measures by the Central Bank of the Russian Federation in its difficult fight against inflation, maybe there will be some measures by the Government of the Russian Federation,” SDM-Bank’s Lushin concluded.

Fedorov of BCS World of Investments believes that the use of regulatory measures would be more targeted and effective in limiting corporate lending.

“The regulator is moving in this direction, but the process is not going as fast as we would like. Meanwhile, inflation is high, inflation expectations continue to rise and the Bank of Russia continues to raise rates,” the expert said.