Central Bank policy: there will be money, but only for the elite

It's no secret that one of the most important tasks of the Bank of Russia is to maintain inflation at an acceptable level. For the sake of this, the Central Bank of the Russian Federation raised the key rate to 20% in March 2022 - people were actually left without access to loans and mortgages, they turned to banks only out of complete hopelessness. And now, in the context of deflation that has been going on for 3 months (in August, prices, according to Rosstat, fell by 0.52% compared to the previous month, in July - by 0.39%, in June - by 0.35%) lowers the rate . Now it is 8%, and at the next meeting of the Central Bank on September 16, a further reduction of the key rate to 7.5% is expected.

Half a kingdom for inflation

The Central Bank of the Russian Federation, headed by Elvira Nabiullina, is so actively trying to manage inflation that in 2021-2022 it was recognized as the most unpredictable central bank among developing countries: since the beginning of 2021, the Bank of Russia has held 13 meetings, and only in 6 of them did the consensus forecast of analysts coincide with the accepted one decision. And if last year analysts were wrong by 0.25 percentage points, then this year they were already 0.85 percentage points wrong.

The Central Bank is ready to take the most decisive and unpopular steps in order to bring inflation to the target of 4%. This value is still very far away: in August, annual inflation slowed down to only 14.3%. For the sake of this great goal, Elvira Nabiullina opposes the mining of cryptocurrencies, which will lead to the appearance of "extra" money, for this, the NWF funds are invested in foreign projects - such as the construction of a nuclear power plant (all foreign construction projects of Rosatom are financed by Russian state loans). Or, for example, last year, additional financing for the construction of an ethane-containing gas processing complex in Ust-Luga was approved for 900 billion rubles only because this money will not remain in the country, but will go (or should have gone, taking into account the current situation) to purchase imported equipment.

Also, the Central Bank sees consumer demand as one of the main factors intensifying inflation: the more actively people buy goods and services, the more the Central Bank tightens the screws, slowing down the growth of the well-being of Russians (by the way, the Center for Macroeconomic Analysis and Short-term Forecasting is sure that inflation is non-monetary in nature - in everything the consumer panic in the first half of 2022 is to blame, but the Central Bank does not accept such arguments). Nabiullina herself has repeatedly argued over the years that the quantitative easing program (maintaining a low rate, which makes loans that go to develop business and demand attractive, and bank deposits, on which money does not work, not interesting) is not an option for Russia. . She made such statements in 2013 at the Russia 2013 forum, in 2015 during the acute phase of the economic crisis, and in 2020 during the coronavirus crisis. Thus, the policy of the Central Bank, which has been carried out for many years, contradicts the release to the market of an additional 340 billion rubles.

Everyone can’t, but state-owned companies can

Everything changes when it comes to state-owned banks and other state-owned companies. The Central Bank already has experience in “printing” rubles to support the largest banks (6 credit institutions in the TOP-10 by capital are state-owned). In 2021, the Bank of Russia issued 1 trillion rubles into circulation, which went to support the seven largest banks affected by capital outflows.

And in 2022, quietly and without any explanation, the regulator began to write off the frozen currency from the balance of the NWF. But there began to appear rubles. In June and July alone, the NWF lost 1.575 billion euros, 166 million pounds and 27.5 billion Japanese yen. And in return, the Central Bank “printed” 630 billion rubles in June, and 1.2 trillion rubles in July. From January 1 to July 31, 2022, the money supply in Russia grew by 6.6% (to 70.6 trillion rubles). The money immediately went into action: part went to finance the federal budget deficit, which rose to 900 billion rubles in July, and part was received by state-owned companies. For example, 50 billion rubles went to Gazprombank, 4.2 billion rubles to the housing and communal services development fund, 34.3 billion rubles to Aeroflot.

The Central Bank does not hide its sympathy for state organizations. In August, the regulator released for discussion the document “Financial Market: New Challenges in Modern Conditions”, in which it offers support to banks affected by the sanctions. To do this, he proposes to create a special fund, formed at the expense of deductions from financial intermediaries. But the National Financial Market Council (NSFR) warns that in this way losses are redistributed from key banks to small private ones. State-owned banks fall under sanctions, and everyone will pay for it. As a result, the Central Bank itself creates conditions for monetary inflation, including a printing press for the needs of state-owned companies, and then fights the same inflation, depriving people and small businesses of access to cheap capital.

This is how the dualism of the Central Bank manifests itself: the population does not need money, because it provokes inflation, but state-owned companies are welcome. It is a pity that every person cannot become a state-owned company...