24.07.2026, 12:13
The consequences of a sharp reduction in the key rate have been assessed
Source: OREANDA-NEWS
OREANDA-NEWS A rapid reduction in the Bank of Russia's key interest rate will lead to a rapid redistribution of wealth, which will undermine confidence in the financial system and eventually destroy it. Investment banker Evgeny Kogan told about this in his Telegram channel.
He explained that if you lower the rate to ten or four percent at once, it will become easier for businesses to attract cheap loans and their financial situation will improve. In addition, every citizen or company with debt will face the fact that their loans have depreciated, meaning payments will take significantly less money.
However, depositors who kept their funds in rubles will lose a significant portion of their wealth due to the depreciation of money. In other words, with the available funds, they will be able to buy significantly fewer goods and services than they could before.
In such circumstances, the ruble will begin to be associated with the loss, rather than saving money. People will understand that it is worth borrowing in rubles, but it is better to save in other instruments, for example, in foreign currency. In such conditions, banks will quickly run out of funds for lending, that is, a loss of confidence in the national currency will quickly lead to the unavailability of loans, and hence an increase in their cost.
Kogan warned that the country is "already one foot on this path." The fact is that investors and banks require federal loan bonds (OFZ) to yield at the level of 16 percent per annum and above, and this is a lot, taking into account the current official inflation. In countries where confidence in the national currency is high, the government borrows at a much lower percentage precisely due to the minimal risk of loss of wealth.
According to the economist, taking into account this logic, the Central Bank at a meeting of the board of directors will have to choose between reducing the key rate to 14 percent and keeping it at 14.25 percent.
Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs (RSPP), believes that maintaining the key rate at 14.25 percent is fraught with massive autumn bankruptcies of companies and the shutdown of ongoing investment projects.
He explained that if you lower the rate to ten or four percent at once, it will become easier for businesses to attract cheap loans and their financial situation will improve. In addition, every citizen or company with debt will face the fact that their loans have depreciated, meaning payments will take significantly less money.
However, depositors who kept their funds in rubles will lose a significant portion of their wealth due to the depreciation of money. In other words, with the available funds, they will be able to buy significantly fewer goods and services than they could before.
In such circumstances, the ruble will begin to be associated with the loss, rather than saving money. People will understand that it is worth borrowing in rubles, but it is better to save in other instruments, for example, in foreign currency. In such conditions, banks will quickly run out of funds for lending, that is, a loss of confidence in the national currency will quickly lead to the unavailability of loans, and hence an increase in their cost.
Kogan warned that the country is "already one foot on this path." The fact is that investors and banks require federal loan bonds (OFZ) to yield at the level of 16 percent per annum and above, and this is a lot, taking into account the current official inflation. In countries where confidence in the national currency is high, the government borrows at a much lower percentage precisely due to the minimal risk of loss of wealth.
According to the economist, taking into account this logic, the Central Bank at a meeting of the board of directors will have to choose between reducing the key rate to 14 percent and keeping it at 14.25 percent.
Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs (RSPP), believes that maintaining the key rate at 14.25 percent is fraught with massive autumn bankruptcies of companies and the shutdown of ongoing investment projects.
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