Copyright tass
KAZAN, October 28. /TASS/. A sharp, unjustified reduction in the Bank of Russia's key rate will lead to increased inflation expectations, while business loans will not become cheaper, advisor to the governor of the Bank of Russia Kirill Tremasov said at the VTB "Russia Calling!" Investment Forum in Kazan. "An unjustified reduction in the key rate will lead to an increase in inflation expectations. If inflation expectations are high and the rate is reduced under these conditions, the same scenario as in Turkey could occur. We are often asked to take irrational steps - to sharply cut the rate to make business loans immediately cheaper. No, it doesn't work that way," Tremasov said. He also stressed that a rate reduction is only possible with a sustained decline in inflation. "We will do this when we see that sustainable inflation is truly close to the target. For now, we see a predominance of pro-inflationary risks, so it's too early to cut the rate," the adviser to the Central Bank governor concluded. On October 24, the Bank of Russia decided to reduce the key interest rate by 0.5 percentage points, bringing it to 16.5%, stating that it will maintain a level of monetary policy strictness necessary to return inflation to its target. About the Forum This year five Russian cities host the VTB Investment Forum "Russia Calling!" The forum's first venue was St. Petersburg (September 24). Yekaterinburg hosted the event on October 7. After Kazan the forum will continue in Krasnodar on November 13. The forum will conclude with the traditional two-day event in Moscow. The VTB Investment Forum "Russia Calling!" was first held in 2009. This year this is the first time when it is being held in an updated format, with four additional cities taking part. International investors will traditionally meet at the Moscow venue in December. TASS is the forum's media partner.
