The central bank’s key rate hike and the strengthening of the ruble are insane, says billionaire Oleg Deripaska.
“The madness with the key rate and the strengthening of the ruble continues,” he wrote on his Telegram channel on Friday, commenting on the Central Bank’s decision to raise the cost of loans for the third time in a row, to an annual maximum of 5.5% per annum.
According to the businessman, who is among the top 40 richest people in Russia with a fortune of $ 3.8 billion (according to Forbes), he realized that the lobbyists for carry-trade operations (in which investors invest in high-yield currencies) are “stronger than ordinary Russians, in our politics ”.
The Russians, according to Deripaska, in the mass (75%) support the policy of a weak ruble. He wrote about this in his Telegram on November 7, referring to a public opinion poll conducted by the online platform Webbankir (its results were published by Vedomosti).
According to the study, 56% of Russians believe that the weakening of the ruble does not in any way affect their financial situation. Another 24% reported a slight deterioration in their finances due to the growth of the dollar and euro.
A noticeable deterioration in their financial situation due to devaluation was noticed, according to the survey, only by 18%.
The figure of 75%, voiced by Deripaska, does not appear in the study, and the billionaire does not explain where he got it from.
Deripaska, included in the US sanctions lists in 2018, has criticized the Central Bank for years, making accusations ranging from destroying millions of jobs to refusing to participate in the implementation of the President’s Decree on National Development Goals.
On March 22, Deripaska said that the factors accelerating inflation, named by the Central Bank, were fake, the government of Mikhail Mishustin should be “subdued”, and the central bank should be “reinforced so as not to allow him to play on the side of the opposition and push citizens into the streets.
The essence of Deripaska’s claims is that loans in Russia are too expensive, and that the priority of controlling inflation, chosen by the Central Bank, is “mythical”.
The businessman was unhappy when the Central Bank cut the rate (calling it “insufficient measure”), and when he began to raise it, he accused him of “attacking citizens’ incomes.”
On January 28, Deripaska said that the decline in the population of Russia is also “a sad result of the work of the Central Bank.” “If we objectively approach the analysis of the current situation in the economy and the financial market of the Russian Federation, then the Central Bank should have reduced the rate to 3%,” Deripaska wrote on March 22.
The Russian industrial lobby is demanding cheap loans, forgetting to remind that this will lead to a proportional decrease in the rates on household deposits, which no longer cover inflation, that is, are negative in real terms.
Citizens’ money in the banking system is slowly consumed as price increases accelerate and the ruble depreciates relative to the mass of commodities. But the borrowers’ lobby proposes to solve the problems of the economy at the expense of cheap money – that is, in fact, “at the expense of citizens who entrust their money to banks,” said Alexander Razuvaev, head of the IAC Alpari.
But apart from mortgages and enterprises in Russia, there are many ordinary investors, for them the main thing is reliability, and they need rates on deposits 2-3% higher than the inflation rate, Razuvaev reminds.