Market Participants Anticipate Inflation Reduction
OREANDA-NEWS. According to the third issue of commentary Banking Sector Liquidity and Financial Markets, the dynamics of long-term interest rates in the money market and the debt market in May 2016 speaks of the growth of market participants’ confidence in the Bank of Russia’s policies and decreased inflation expectations.
Average inflation expectations for the next 7 years calculated on the basis of OFZ-IN yields (OFZ-IN – inflation-indexed federal government bonds), were down to 4.5–5.0% in May against 5.6–6.1% in February.
Short-term rates of the money market after a local reduction in early May shifted to the upper bound of the Bank of Russia interest rate corridor in the second half of the month against the backdrop of increased borrowings by certain major banks. Interbank lending rates and repo rates are expected to be close to the key rate in June.
The banks’ demand for the regulator’s funds was low in May due to the liquidity inflow, resulting from the use of the Reserve Fund and seasonal shrinking of cash in circulation.
Further inflow of funds from the budget is possible in June, but the credit institutions’ demand for refinancing may grow due to seasonal increase in the banks’ demand for liquidity on the last day of a quarter. Deposit auctions will not be required in June.
The banking sector may go to liquidity surplus somewhat later than the Bank of Russia anticipates, taking into account the revised forecast of disbursements from sovereign funds. A borderline situation will be likely to shape up between the shortfall and surplus, and the final transition to the surplus will occur in
Комментарии