Consumer lending rates climbed, weekly inflation statistics surprised

RUSSIA ECONOMICS - In Brief 08 Dec 2021 by Alexander Kudrin
The CBR published October statistics on consumer lending and deposits rates that continued to climb (but not evenly and proportionally) as the regulator moved its key rate up. As the key rate was hiked last time by 75 bps at the end of October, the effect of this particular rate hike is yet to be seen. In October, average monthly lending rates for credits with over 1Y maturity increased moderately compared to September (to 10.76% versus 10.66%) as the government program of subsidized mortgages stays in place. However, shorter credits were affected. The average lending rate for credits with different maturities varying from below 30 days up to six months climbed to 18-20%. Interest rates were lower for credits from 6M to 1Y so that the average interest rate for credits with the maturity up to 1Y reached 14.7%. In November, this rate will likely exceed 15%. Meanwhile, average weighted deposit rates remained strongly negative in real terms.Meanwhile, Rosstat reported that inflation in November reached 0.96% m-o-m. Inflation YTD climbed to 7.51% while y-o-y inflation hit 8.4%. Inflation statistics demonstrate that CBR efforts to keep inflation at bay didn’t work as orthodox monetary policy tools applied by the regulator were unable to counterbalance inflationary pressure coming from a too generous budgetary policy. Federal budget expenditures were amended this year as revenues exceeded the most optimistic expectations, and additional financing started flowing in in recent months. Meanwhile, one-time massive transfers to pensioners and some categories of public employees ahead of the September Duma elections triggered the rise of inflation. Inflation will remain elevated un...

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