In October, short-term interest rates in the Russian monetary market exceeded the Bank of Russia’s key rate several times due to the ineffective distribution of liquidity on the market. As banks adapt to the changed provisioning requirements, interbank lending rates will approach the Bank of Russia’s key rate, the Central Bank of Russia announced on November 15, 2016.
In October, market expectations relative to future trends of interest rates moved upwards under the impact of several factors. First, in September, the Bank of Russia decided to keep the key rate unchanged until the end of 2016, which put substantial upward pressure on the rates. The regulatory bank’s decision maintained a moderately stringent credit environment in order to further curb inflation. Second, the probability of the U.S. Federal Reserve System’s tougher monetary policy in December increased.
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