29 Apr 2011 13:51

Central Bank raising refi, some other key rates 0.25 pp

MOSCOW. April 29 (Interfax) - The Central Bank unexpectedly decided to raise its refinancing rate and selected other key rates a quarter of a percent on May 3 in view of still high inflationary expectations and uncertainty over how the situation in the global financial and commodity markets might affect the Russian economy, the Central Bank said in a statement.

The refi rate is now 8.25%.

Analysts told Interfax that they thought the Central Bank would leave lending rates on hold but raise required reserve ratios and deposit rates.

The Central Bank said in a comment to its latest decision that rates on its deposit transactions would continue to have a major impact on money market rates while banking liquidity was high.

Inflationary pressure remained high in April: inflation was 9.6% in annual terms on April 25, compared with 9.5% in February-March. However inflation in monthly terms has slowed, especially for selected foods, indicating that the price shock related to farm produce, underpinned by high world food prices, is wearing off. However monetary factors continue to play a marked role in sustaining inflationary pressure.

Macroeconomic tendencies remained varied in March, with industrial output rising compared with February but edging down in annual terms, the Central Bank said. Unemployment continued to fall. However retail turnover has been growing faster than personal incomes in recent months, suggesting that the public are less inclined to save and more inclined to spend, which could heighten inflationary risks.

The CB said its further steps regarding interest rates would depend on the degree of inflationary pressure, pace of economic growth and the foreign economic situation.

The Central Bank directors are next expected to meet to discuss rates at the end of May.

The Central Bank's rates effective from May 3 are as follows:

Term As of 3.05.2011 As of 28.02.2011
Lombard auctions (minimum rate) 7 days 5,5 5,25
3 months 7 6,75
6 months 7,5 7,25
12 months 8 7,75
Direct repo (minimum rate) 1 day 5,5 5,25
7 days 5,5 5,25
90 days 7 6,75
6 months 7,5 7,25
12 months 8 7,75
Overnight loan 8,25 8
Forex swaps (ruble portion) 1 day 8,25 8
Lombard loans (fixed rate) 1 day 6,75 6,75
7 days 6,75 6,75
30 days 6,75 6,75
Direct repo (fixed rate) 1 days 6,75 6,75
7 days 6,75 6,75
12 months 8 7,75
Loans secured with non-market assets or guarantees (fixed rate) Up to 90 days 7,25 7
91 to 180 days 7,75 7,5
181 to 365 days 8,25 8
Deposit operations (fixed rate) Overnight 3,25 3
Tom next, spot-next, demand 3,25 3
One week, Spot-week 3,25 3
Refinancing rate 8,25 8

The required reserve ratios for banks are currently 5.5% for ruble and foreign currency deposits by non-resident corporate entities, while the requirement for ruble and foreign currency deposits from individuals and for other liabilities is 4.0%.