OREANDA-NEWS. The Bank of Russia starts publishing monthly comments 'Banking Sector Liquidity and Financial Markets' to make it possible for our readers to get a more detailed insight into the process of banking sector liquidity regulation and steering of money market rates.

The initial comment says that after a neutral influence of fiscal flows in March 2016 probability is high for liquidity inflow due to the conversion of certain funds of the Reserve Fund. According to the Bank of Russia estimations, if the current year's federal budget deficit exceeds 3% of GDP and is financed from the Reserve Fund, then as early as in H2 2016 the banking sector may have the structural liquidity surplus.

Overnight interbank loan ruble rates and one-day repo ruble rates were close to the Bank of Russia key rate in March. Forex swap rates remained low in the interest rate corridor due to a higher demand for foreign currency by some participants, but as a whole we are facing a stable situation with foreign currency liquidity. One-day rates are most likely to keep the same position in the interest rate corridor in April.

In March long-term instrument rates  reduced most notably in money and debt markets, reflecting the higher expectation of lower rates in the future against the backdrop of lower inflation.