Central bank chairwoman says bank can cut key rate by 1 pp in June

MOSCOW, May 8 (PRIME) -- The Russian central bank does not rule out cutting the key rate by 1 percentage point in June, Chairwoman Elvira Nabiullina said at a press conference on Friday. 

"I do not rule out that if the situation continues as is, an option to cut the rate by 100 basis points will be considered as well (in June), doubtlessly, among the other options," Nabiullina said.

The current situation in the economy complies a central bank forecast of an 8% decline of the gross domestic product (GDP) in April–June, she said. "In general, the leading indicators for April meet our forecast of an 8% GDP fall in the second quarter on the year," Nabiullina said.

Nabiullina said that economic activity had stabilized at a low level. "The financial flows in the industries for April 20–24 and our weekly poll of companies show that economic activity has stabilized at lower levels," she said.

According to the official, the central bank registered higher demand for cash as the date of lockdown end is unclear. Banks’ liquidity surplus decreased to 1.4 trillion rubles from 2.8 trillion rubles at the start of the year, she said.

Retail deposits rose by 0.8% in April and corporate deposits fell by 1.4%, she said. "The situation with people's deposits improved in April. In March there was a small outflow, of about 1%, in April, according to preliminary data, the inflow of retail deposit funds stood at 0.8%. But at the same time, the funds of organizations decreased by 1.4%, while this cut was compensated by state money inflows," the official said.

Corporate loans grew  by 1.2%, she said. "This is lower than a record rise in March, when it was 2.6% but noticeably higher than average figures of before the restrictive measures which reflects increased need of companies in banking financing on the back of declining cash flows and narrowing of the bond market," Nabiullina said, adding that retail loans fell by 0.6%.

Banks have restructured 343 billion rubles of loans to small and medium business, she said.

According to the official, the central bank will switch to biweekly press conferences from weekly meetings.

(74.1169 rubles – U.S. $1)

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