June 19, 2020 / 12:19 PM / 17 days ago

HIGHLIGHTS-Russian central bank governor speaks at press conference

(Adds quotes)

MOSCOW, June 19 (Reuters) - The Russian Central Bank Governor Elvira Nabiullina spoke at an online press conference after the central bank cut its key rate by 100 basis points to 4.50% on Friday.

Below are the highlights of her comments:

ON ROUBLE

“The strengthening of the rouble has a disinflationary effect and this gives us more room for monetary policy easing.”

ON CORONAVIRUS SECOND WAVE

“We do not rule out this kind of scenario, but our base scenario does not include risks of a second coronavirus wave. But even if these risks play out, in our view the economic consequences will be less because the economic financial system and people’s behaviour have already adapted to that type of risk.”

ON BANKING SECTOR PROFITS

“We do not expect losses in the banking sector as a whole, maybe a small profit.”

ON GDP

“We now estimate that the GDP contraction in the second quarter could be slightly higher than we expected, and we expected a contraction close to 8%. But we are not expecting a fall of more than 10%.”

ON OFZ BONDS

“Expectations for our rate today, of course, were already partly included in market expectations, so we do not expect any sudden changes here. In general, we believe the finance ministry can carry out its borrowing programme without difficulties.”

ON NEUTRAL RATE

“Arguments over adjusting our opinion on the neutral rate have increased over the past year.”

“Although changes are possible, one should not expect any sharp changes. I can say that a value below 5% is currently beyond our consideration.”

“We do not expect a transition to negative real rates.”

ON INFLATION

“Our year-end inflation estimate is 3.8-4.8%. It is a wide enough corridor, taking into account all the circumstances, the uncertainty of many factors that influence inflation. Now, in our assessment, inflation is likely to be at the lower end of this range.”

“Our inflation will not speed up, but the yearly inflation indicators could rise. This is linked, above all, to the low base effect of the previous year.”

ON RATE DECISION

“The fall in demand in the second quarter will be deeper and the recovery more stretched, than we suggested in April.”

“Events of the last month and a half have confirmed the room for a considerable rate cut and we are using it.”

“We do not consider today’s step of one percentage point a standard step.”

ON FUTURE RATE CUTS

“At upcoming meetings we will assess to what extent further rate cuts are appropriate. Our approach is to move gradually and carefully.”

“Depending on the information we will receive from clarified forecasts, a pause is quite possible, as is a rate cut; we do not predict precisely here.” (Compiled by Alexander Marrow, editing by Maria Kiselyova)

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