The Bank of Russia announced the next (seventh from the beginning of the year), reducing rates on refinancing operations from 30.09.2009 to 25-75 bp, the solution is a somewhat unexpected both in terms of frequency and in terms of stride length. Previously, reduction was carried out once a month, in most cases, in the first decade that it was logical to link to the publication of official data on inflation for the preceding month. Since the beginning of August (two to reduce to this day) a step of 25 bp, respectively, it seemed reasonable to assume that its length will now be unchanged, so the regulator moved to a regime more fine settings. Of course, on the other hand, it was a clear understanding that the tendency to mitigate the monetary policy of the CBR, which began on April 24 this year, are sustainable. And hints, and practical, direct instruction of representatives of the Central Bank of Russia said that a regulator has the resources and motivation for further cuts. It is obvious that the monetary authorities are considering refinancing rate, if not the sole, then at least a basic tool to stimulate the credit market, defrost which the authorities declared as a bit Fast-core short-term goal of economic policy. Consequently, the major cause of this unexpected decision (double decrease in the month) may be associated with unsatisfactory effect of the previous softening. On the damping of inflation (inflation in September may make estimated 10.7% annualized) and the relative stability of exchange rate alone is not worth mentioning, as long as the factors /theses a priori true and well-known. In a statement, the Department's external and public relations ofBank of Russia said that the cumulative credit economy in September this year, virtually unchanged. According to official figures, the growth of loan portfolio in August was 0.9% with the change in the corporate portfolio was zero, and the volume of retail loans continued to decline, showing the rate at -0.6% (acceleration compared to July). Previously, given the available information on strengthening the credit activity of state banks, including through the development of state guarantees, it could be assumed that the outcome period, we will see positive growth in non-financial portfolio. That is, the dynamics would be determined, unlike in July, not the little value (in terms of stimulating economic activity), the expansion of credit to the financial sector, and by building corporate credit and loans to individuals, but actually it did not happen. Likely that noble undertaking state banks offset by decreases in other portfolios of market participants. The effect of the decision, as in previous cases, will be in the first place soaked up segment of short money, you will have a proportional reduction in major benchmark domestic money market. Concerning the elasticity of the credit market rates on adjustable rates, we have always noted that it is limited and re-evaluate the final effect is not worth it. After all, at this stage the most important factor in limiting the credit stands high macro-economic risks (reduction of final demand, lower profits and revenues, the need for banks to assume greater risks), which is extremely reduced by reducing the cost of the primary attraction of resources is problematic. Recall that from August to July of this year continued to decline in industrial output and fixed investment, GDP up 2 square. in annual terms fell by 10,9%.

However, at the end of this year we expect to maintain positive growth in the loan portfolio, the key arguments in favor of which will: increase the intensity of the primary money supply increase, the use of dokapitaliaztsii deeper development of state guarantees, the expansion of the collector office .

Recall that after the previous reduction, we assumed that by the end of the year adjustable rate will be reduced further by 50 basis points, on the fact that (with certain reservations), and there, though earlier than we expected. We assume that the phase of active mitigation DCT completed and now the regulator may take some pause (say, two months) to assess the market effect of such an aggressive reduction in a relatively short period. Additional reduction of regulated rates by 25 bps the end of the year should not be ruled out (if there is, the closer to the middle of the 4 square.), but an essential /a prerequisite for appropriate action will be to keep an equally depressing state of domestic credit market.

The decision of Bank of Russia from September 30 to reduce the refinancing rate has no effect on Russia's currency and stock markets
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