The causes and consequences of a sharp increase in the Central Bank rate, business about Lokdown and Mikhail Kokorich in “Russian norms!”

Having raised the rate by 0.75 points at once, the Central Bank showed that he was able to surprise. What is behind an unexpected decision and what does it mean for the investor?

In Russia, against the backdrop of new incidence records, the most stringent covid restrictions are introduced since the spring of 2020. This news forced economists to assume that the Central Bank may abandon the new decisive step in raising the rate. But the regulator did not just bake - he suddenly raised the rate at once by 0.75 points and warned about the possibility of even more radical measures in December. It is still difficult to evaluate the damage to the economy from restrictions, and inflation is growing with threatening stability here and now, the Central Bank believes. This is a bad signal for the stock market and good - for the ruble, which for the first time since 2020 has been breaking through 70 per dollar today.

Central Bank against forecasts

The decision of the Central Bank to increase the key rate by 0.75 points at once, up to 7.5%, became not the most radical this year (in July the rate was raised immediately to the item), but exactly the most unexpected. At the beginning of the week, analysts were inclined to 0.5 points. But after the parade of the introduction of QR codes in the regions and the announcement of the closure of the service sector in Moscow, the forecasts changed: the economists considered that the prospect of pressure restrictions on (already slowing down ) economic growth will force the Central Bank to moderate the rate of raising the rate. On Thursday, 22 of 42 analysts in the Bloomberg consensus prognosis panel predicted a increase of 0.25%, 19 believed that the Central Bank would still choose 0.5 points, and only one boldly predicted 0.75.

At the final briefing, Nabiullina said that at a meeting of the Board of Directors of the Central Bank, an increase was discussed not only by 0.75 percentage points, but also for a whole point. Moreover, such an increase can still occur before the end of the year, and from its words and from the materials of the regulator. In its statement, the Central Bank indicated that until the end of 2021, the average key rate is predicted in the range of 7.5–7.7% - the upper boundary of this range - and means an increase in the rate by 1 percentage point. - up to 8.5%.

From the materials of the Central Bank and the explanations of Nabiullina follows: the regulator is much more concerned about the incessant acceleration of inflation than a slowdown in the economic growth. The Central Bank significantly increased the inflation prognosis according to the results of 2021-to 7.4–7.9% (in the July forecast it was 5.7–6.2%) and according to the results of 2022 (from 4% to 4–4.5%). The forecast of GDP remained unchanged - an increase of 4–4.5% in 2021, and further by 2-3% (the forecast of the Ministry of Economic Development for the next three -year -old - 3% per year).

The acceleration of inflation is due to two main stable factors, followed from Nabiullina’s words: the growth of inflationary expectations of the population ( the day before, after a decrease in August-September in October they updated the annual maximum) and the inability to satisfy the growing demand-due to the lack of components and raw materials, problems with logistics and overheating of the labor market. So far, these restrictions are not overcome (and this can last a long time), increased demand does not turn into consumption growth, but pours into prices for those who are ready to pay, and the inaccessibility of increasing goods for the rest, Nabiullina explained.

A few hours after the briefing, Nabiullina with similar statements was the head of the American Fed Jerome Powell, who evaluated inflation risks as temporary in the summer. “Problems on the side of the proposals deteriorate. The risks are shifted towards longer and stable difficulties in deliveries, which means inflation growth, ”Powell said .

Lokdown not yet evaluate

The new covid restrictions on the Central Bank have not yet taken into account - they have not yet been taken into account in the updated inflation forecast, Nabiullina said, adding that she considers the influence of already declared measures on the growth rate of the economy and insignificant inflation.

At the same time, in the opinion of the Central Bank, anti -epidemic restrictions, even despite their pressure on economic activity, are also a systemic factor. In the spring of 2020, Lokdown played against inflation due to a reduction in demand. But the experience of subsequent waves showed that demand is less and less subject to restrictions, and the proposal is falling due to suspension of enterprises, Nabiullina said. As a result, inflation due to covid restrictions is only accelerated.

It is very difficult to quantify the influence of the Locks on the Lockdown on inflation, because first of all it is not known how much they really will be, the director of the group of sovereign ratings and macroeconomic analysis Acre Dmitry Kulikov agrees. Rhetoric during the introduction is now softer, and there was an adaptation to such modes among consumers and companies, he notes.

Entrepreneurs interviewed by The Bell immediately after the announcement of the Moscow Lokdown for the service sector, this time approximately coincided in their assessments with the Central Bank. All of them admitted that a week and a half of covid restrictions will survive, and the main concerns called the introduction of the QR codes and the possibility of other long-term restrictions after November 7.

Since Russia has a low debt load, there will be no disaster from a sharp increase in the rate for economic growth, said Natalia Orlova, chief economist of Alfa Bank. The main risk factor for the Russian economy can be associated with global markets, in particular, a sharp collapse of economic indicators in China, which can pull energy markets, Orlova believes.

Parsing of signals

The chief economist of Alfa Bank Natalia Orlova is concerned about the gap between the communications and the actions of the Central Bank. “If the Central Bank says that next year he sees the possibility of returning inflation to 4%, then there is too much gap between the current inflation rate and Target,” she says. Given the lag of the action of monetary policy from three to six quarters, the space of 2022 should be covered by previously made increase, Orlova explains. “The actions of the Central Bank actually say that the regulator believes that acceleration of inflation is long -term. In fact, by its actions today the Bank of Russia already affects the horizon of 2023, ”the economist believes.

The situation with rising prices is largely uncertain, notes the main strategist aton Alexander Kudrin. The most diverse factors will be influenced on inflation, from a partial Locksuan to the possible recognition of Russian WHO vaccines and the European Union (which can activate away tourism), he adds. “Do not forget about an increased amount of budget expenditures at the end of the year, which is traditionally a dull factor. One way or another, a further increase in the rate until the end of 2021 looks like a very likely event, ”continued Kudrin.

Having raised the rate immediately by 0.75 percentage points, the Central Bank involved a resource of surprise: the theory says that in the framework of a reasonable economic policy, unexpected solutions have more influenced the economy than the expected ones, Dmitry Kulikov from Akra notes. This will affect lending and inflation with a restraining way, he believes. “But too often to be unexpected is the risk of losing the effectiveness of the signal,” Kulikov adds.

What does it mean for the investor

• After the decision of the Central Bank, the ruble was strengthened by 1.8% and grew up to the level of 69.81 rubles/$ (by the evening of Friday, the rate was adjusted to 70.3) and 81.28 rubles/€ ( by the evening - 81.85). The growth of the rate increases the attractiveness of Russian assets and leads to the influx of foreign capital to the country, including through Kerry Trade operations, said Mikhail Vasiliev, chief analyst of the Socialist Republic of Commerbank.
• For the ruble in the medium and long term, today's increase in the rate and the signal of the likely further tightening of monetary policy is an unconditional positive, the dollar may drop below 70 rubles, said the Bell Olga Belenkaya, the head of the macroeconomic analysis of the FG Finams. In her opinion, in the context of the expected normalization of the Fed’s policy, the ruble can become one of the most protected currencies of developing markets.
• For the shares market, a further increase in the rate, which is allowed in the basic scenario, is certainly unpleasant news, says Andrei Kochetkov, leading analyst at the Global Investment Opening Department: the dividend profitability of the stock market is already lower than the revenues of bonds. The higher the Central Bank rate, the more attractive bank deposits and tools with fixed profitability become, he said. “In fact, we expect that the coming year will be the year of a conservative investor,” says Kochetkov.

We have examined in more detail the consequences of the solution and signals of the Central Bank in this material .

Lokdown

"People feel deceived"

Non -working days in Moscow and the Moscow Region, in fact, turned out to be a Lokdown for business. Next week we will recall how it lives when all almost all the places of attraction are closed by the city dweller. From October 28 to November 7, customer enterprises will not be able to service the spheres of trade and services, sports, culture, recreation, entertainment, films and others (the exception is the sale of drugs, food products and other essential goods). Entrepreneurs will again have access only by remote sale of goods and the work of the discovery (for catering). By tradition, we, by tradition, asked the representatives of the affected industries what damage they expect from the next downtime, whether they plan to accept help from the state and how they generally relate to the script of a new tough Lokdown.

Entrepreneurs

How Michelin stars have influenced business restaurant business

Among the restaurateurs, Lokdown is not so terrible, probably only the newly -minted owners of the Michelin stars. The legendary restaurant guide Michelin came to Russia in October. This was preceded by more than 10 years of negotiations, the change of Moscow officials responsible for them and a contract for 80–90 million rubles with the Moscow government, said Forbes this week.

As a result, the stars (excluding the "green" stars for environmental friendliness) received 9 Moscow establishments . Since then, their phones are torn, sites “lie down”, and you can book a table no earlier than December. We learned from the owners and managers of “star” restaurants as the guide changed their business and life.

EDUCATION

Want to learn from Italy?

In School invites you to take part in an educational trip to the Supreme School of Bokkoni University in Milan, which will take place in December!

The New Leadership for a New World, developed together with Bokkoni professors, includes five days of intense trainings, master classes and lectures at which you will learn:

• How digital technologies transform companies
• How the future financial market will change
• how to build an effective team and be a proactive leader
• how to introduce the principles of sustainable development in your business
• how psychological capital works and why apply it in work

In addition, during the trip you will visit the largest companies - Campari Group, Barilla, Giorgio Armani, Twinset and Dalara - and get acquainted with the leaders of the Italian business. You will also have the opportunity to take part in informal dinners and get acquainted with the heroes of “Russian norms”!

Visa and business invitation are provided, quarantine and vaccination are not required. The trip will take place from December 13 to 17. You can find out all the details and leave a request here .

"Russian norms!"

With Mikhail Kokorich

Mikhail Kokorich is the first hero whose history is "Russian norms!" They tell a second time: three years ago, the entrepreneur was already visiting Elizabeth Ossetian . Then he talked about his American startup Momentus, who intended to produce space tugboats. Since then, the company's rating has reached $ 1 billion, and former US intelligence officers appeared in its management. But Kokorich himself was recognized as a threat to US national security and even banned Momentus on Twitter. To blame for this, according to him, the origin. Now Kokorich moved to Switzerland, where he founded a new company Destinus a few months ago. It is planned that she will be able to deliver cargo into space in a matter of hours, which are now transported for almost a week. The entrepreneur is confident that he took into account errors made in previous projects - in addition to Momentus, this is Technila, Astro Digital and Dauria Aerospace. Why did Cokorich disliked American regulators, how investors reacted to his conflict with the US military and why a person needs space? See the entire interview on the channel “Russian Norms!”, And the most striking quotes areon our site .

INVESTMENTS

Four ways to buy promotions at the Pre-IPO stage

Previously, at the recent startups that reached the Pre-IPO stage, only venture investors could work mainly. But gradually, such investments become available to a wider circle of investors. How to invest in Klarna, Stripe, Revolut and other companies that are just going to get to the exchange, and what are the pros and cons for each way, at our request, Denis Ivanov, CIO of the Digital Horizon investment company, told .

Bell.club

With David Rafalovsky

The next Tuesday, Bell.club will be the executive vice president and CTO Sberbank David Rafalovsky. It can be called the "right hand" of Herman Gref on technology. Since 2017, Rafalovsky has been implementing the Bank's technological transformation strategy and is responsible for Sberic technological businesses, including SberCloud, SberDevices and others.

We will discuss with David:

• What is the Sberic technological strategy and how does it change the alignment of forces in the technological arena of Russia?
• How is Smartmarket - a showcase of technology and tools from Sberic to solve it - becomes a bridge to the Sberbank ecosystem?
• Why do we need virtual Assistants "Salute" and how can you earn money with their help by business and entrepreneurs?

Participants of offline meetings will be able to talk with David behind closed doors and ask him their questions. The online broadcast of the open part of the meeting will be available on the Bell.club Live channel. You can buy a ticket for the event here . We take all the necessary measures to prevent the possible spread of viral diseases and maintain the health of speakers and participants in the events.