Market and Financial Sectors Adjust to Elevated Lending Rates
In a recent report by Khabarovsk Krai Today, citing information from VTB's press service, Dmitry Pyanov, the first deputy president of VTB, expressed optimism about the resilience of Russian businesses despite a prolonged period of high interest rates. Pyanov noted that market participants have become more experienced and ready for quick reactions to economic shocks.
According to Pyanov, this increased readiness enhances the adequate adjustment of expectations in the future and increases the chances of controlling inflation. The Central Bank of Russia is continuing to adhere to its goal of containing inflation, with the key rate, set by the Bank of Russia, remaining at 21% for nearly eight months.
However, the article did not provide any data or statistics to support Pyanov's claims or the claims made by other sources regarding inflation expectations among the population or the readiness of market participants.
While Pyanov did not provide specific details on how the key rate will directly affect deposit rates, he mentioned that acceptable growth in lending and money supply is 5-10% per year to maintain inflation within target ranges.
Contrary to experts' predictions of possible defaults, this prolonged high key rate has not led to mass bankruptcies of large companies. However, the exact nature of the challenging macroeconomic conditions was not detailed in the report.
Industry consensus, led by figures like Sberbank CEO German Gref, suggests that high interest rates and a strong ruble are creating a challenging environment for businesses. Gref warned that real interest rates are cutting into business profits and forcing companies to postpone investment decisions. These conditions, according to Gref, threaten not only current growth but also prospects for the next several years.
It was not mentioned whether small or medium-sized businesses have also shown increased readiness to react to economic shocks or resilience in the face of high interest rates. The article also did not elaborate on the specific tools being used to limit price growth or the challenging macroeconomic conditions.
Despite Pyanov's optimism, the report did not provide data to support the readiness of market participants or population's inflation expectations. Pyanov's suggestions propose a growth of 5-10% in lending and money supply annually to maintain inflation within target ranges, whereas Gref warns that high interest rates and a strong ruble create a challenging business environment, potentially threatening growth for several years.
