Manturov hopes for balanced monetary policy, as high interest rates discouraging investment

MOSCOW. Nov 7 (Interfax) - Government support measures will partially offset the negative impact that the Russian Central Bank's latest interest rate hike is having on investment activity in industry, although it will not be possible to increase funding for them under the already drawn up federal budget before the second half next year, Deputy Prime Minister and Industry and Trade Minister Denis Manturov told reporters.

"Of course, the rate increase is not motivating industrial businesses to carry out their investment plans. However, the array of support measures that the government, specifically the Industry and Trade Ministry, currently has makes it possible to offset expenses on research and development work," Manturov said on the sidelines of the Russia exhibition.

"However, we of course are counting on there being a balanced approach to monetary policy. And at some point we will count on interest rates - key rates changing in the direction of a decrease," Manturov said, adding that the "government and Industry and Trade Ministry will in every way ensure a balance between bank instruments and support measures."

Asked if an increase in funding for support measures that are linked to the key rate, such as loan subsidies through the Industrial Development Fund and corporate programs to increase competitiveness, has been discussed with the Finance Ministry, Manturov said the budget for next year has already been drawn up and it will possible to revisit the issue of additional funding after the first half of 2024.

"You know, given that the budget has now already been drawn up for next year and our ministry, among others, must take into account the budget for the whole year, our objective is to provide for these support measures in the first part of the year, and then we'll understand how things are unfolding on the market and in the economy in general, the balance of the budget and what key rates will be so that it's possible to make balanced decisions," Manturov said, commenting on the possibility of increasing support for industry.

Russia's Central Bank unexpectedly raised its key interest rate by 200 basis points to 15% on October 27. Almost all analysts polled by Interfax had forecast an increase of 100 points, while a 200-point hike was an alternative scenario mentioned in only a few forecasts.

In a statement issued after the board meeting, the Central Bank omitted a guidance signal and left only neutral wording, saying that it "will make further decisions on the key rate taking into account the actual and anticipated dynamic of inflation relative to the target and the development of the economy on the forecast horizon, as well as assessing risks from internal and external conditions and financial markets' reaction to them."