Translated material
The cost of war in Ukraine. Online October 28
The Bell continues to conduct online, dedicated to the economic consequences of the war in Ukraine, which began on February 24.
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17:09 ❗️Shoigu reported to Putin on the completion of partial mobilization, writes TASS . The average age of those mobilized is 35 years. 300,000 people have been called up, 82,000 have been sent to the “special operation” zone, and the rest are being trained, he says.
The troops, according to Shoigu, were sent:
- more than 1,300 "representatives of executive authorities";
— over 27 thousand entrepreneurs;
- and 13 thousand citizens who voluntarily "expressed a desire to fulfill their duty."
17:00 Citibank sells portfolio of consumer loans to Uralsib. The bank announced its decision to exit the retail business last year.
14:44❗️The Central Bank kept the key rate at 7.5%.
The Central Bank interrupted the cycle of cutting the key rate and left it unchanged at 7.5%. Prior to that, he reduced it six times in a row after a sharp increase to 20% in February.
Causes. The regulator noted the diversity of factors that have an impact on inflation. Consumer price growth remains low, contributing to a slowdown in annual inflation. In September, it slowed down to 13.7% after 14.3% in August, and by October 21 - to 12.9%. But inflation expectations of the population and businesses have grown compared to the summer and are at an elevated level.
The Central Bank also assessed the impact of partial mobilization on inflation. In his opinion, it will contain the dynamics of consumer demand and inflation in the coming months, but in the future its effects will be pro-inflationary due to increased restrictions on the supply side. We talked about the first assessments of the impact of mobilization on the economy here .
What's next. The Central Bank will make further decisions on the rate "taking into account the actual and expected dynamics of inflation relative to the target, the process of structural adjustment of the economy, as well as assessing the risks from internal and external conditions and the reaction of financial markets to them."
They talk about it. The market expected that the Central Bank would not change the rate. Of the 26 analysts polled by Reuters, 22 predicted such a decision.
The market and the regulator will need more time to “digest” the events of September and understand how they will affect the economy, Renaissance Capital economists Sofya Donets and Andrey Melashchenko noted. They point out that in six weeks the oil embargo will come into effect - one of the key uncertainties for the forecast of economic activity in Russia.
The Central Bank decided to remain cautious mainly due to inflationary expectations and in this regard did not lower the rate this time and does not give an unambiguously positive signal for the future, Stanislav Murashov, a macro analyst at Raiffeisenbank, explained to The Bell. In his opinion, the regulator will take a break and will not change the rate in order to assess the consequences of the events of recent months. “Now we see that there are no unambiguous signals from the economy for further easing. The effect of the corrective price reduction, which has been manifesting itself since May, is fading. We are now in a situation where prices are close to their equilibrium value in the current realities, and then it is not at all obvious that disinflation will continue month by month or week by week, ”the economist notes. There is room for further rate cuts, but it is possible only under a favorable scenario, he said.
12:15 The recession in the EU's largest economy has moved away: in the third quarter, Germany's GDP unexpectedly grew by 0.3% compared to the previous quarter, with forecasts of minus 0.2%. In the second quarter, the economy shrank by 0.5%.
Where the growth came from when so many indicators pointed to a fall is not entirely clear, but final consumption supported the economy. And it, in turn, is the residual effects of the exit from the coronavirus pandemic and direct assistance packages to the population, including “nine-euro tickets”. This was enough to offset the impact of rising energy prices and wars in Ukraine.
11:03 On the day of the next meeting of the Central Bank on the rate, spoke Oleg Deripaska about the policy of the regulator. “Until we muster up courage (and in principle we have nothing to lose for a long time), we will not reduce the rate to 5%, we will not carry out a quantitative easing program to secure mortgages and investments for 20-25 trillion rubles, we will not be able to start economic growth . Entrepreneurs and the population will not take exorbitantly expensive loans for anything!”
10:29 The Central Bank has many macroeconomic reasons to lower the rate at today's meeting, but they will not overpower the negative statistics and the effects of mobilization. The fact that the rate will remain at 7.5% was predicted by 22 Bloomberg analysts, a decrease of 0.25 percentage points. three are waiting, by 0.5 p.p. - one.
The main thing for the night and morning:
- In response to the refusal of foreign banks to work with the Mir payment system due to sanctions, two Russian banks plan to create a network of their own terminals abroad. For a scheme close to the expansion of Chinese payment systems, intermediaries are still needed, but their sanctions risks are less.
- Apple's results so far are the only bright spot in the big tech week: iPhone sales grew almost 10% in the quarter, total revenue rose 8% yoy to a record $90.1 billion, and profit reached $20.7 billion. Amazon gave a weak sales forecast for the main fourth quarter, its postmarket shares fell 12%.
- Elon Musk finally bought Twitter, fired management and will become the CEO of his new company. Musk has already made the first ideological decision: lifetime bans on Twitter will be lifted, it is very likely that Donald Trump's account will be restored.
- US President Joe Biden reacted to Vladimir Putin's speech yesterday, in which he clearly indicated that he was not going to use nuclear weapons in Ukraine. “If he’s not going to, why is he talking about it? Why is he talking about tactical nuclear weapons? Biden was surprised. “His approach is dangerous. But he can end it all. Get out of Ukraine."
- Russian retailers in the short term expect sales growth only due to inflation, writes Kommersant . Chains diversify purchases, go to small formats, simplify the assortment and try to switch to local raw materials.
- The gender imbalance of mobilization even affected the thinning audience of Russian cinemas: the share of men among the visitors decreased to 30% from the usual 42%. The industry fears in advance the second wave of mobilization in the key New Year's season.