OREANDA-NEWS. In October, short-term money market rates slightly exceeded the Bank of Russia key rate under insufficient reallocation of liquidity in the market. While banks are getting adjusted to new mandatory reserve requirements, interbank lending rates will be built close to the Bank of Russia key rate, the 8th issue of the commentary ‘Banking Sector Liquidity and Financial Markets’ states.

Market expectations about future rate dynamics of rates in October were revised upwards due to some factors. First, the decision taken by the Bank of Russia in September to leave the key rate unchanged till the end of 2016 has been substantially affecting their dynamics. This decision added to retaining moderately tight monetary conditions to further curb inflation. Second, the US Federal Reserve System is expected to carry out a tighter monetary policy in December.

Nevertheless, market participants’ inflation expectations have remained the same, still in excess of the Bank of Russia target level.

Ruble exchange rate volatility abated in October under lower volatility of oil futures quotations and returned to the summer 2014 level.