OREANDA-NEWS. April 16, 2009. The Central Bank of Russia opposes the idea of state regulation of bank loan rates and views it as a “dead-end road”, First Deputy CBR Chairman Alexei Ulyukaev said. Last week, Russian President Dmitry Medvedev said that state regulation of bank loan rates could be “the best approach” to ensure economic stability during the crisis.

“I am against state regulation of loan rates, this is a dead-end road”, Ulyukaev said. He believes that after CBR cuts rates in the coming weeks, the cost of funding for banks will become cheaper and they will be able to downsize rates themselves. “I am confident that we will resolve the issue of slashing CBR’s refinancing rate and other rates in the coming weeks.

However, we should not get ahead of ourselves and artificial interest rate cuts could make banks feel uncomfortable in terms of deposits. We should try to achieve a balance”, Ulyukaev said.