Page 63 - Russia OUTLOOK 2024

Russian Central Bank Governor Elvira Nabiullina said in November that she was confident that the central bank would be able to bring Russian inflation closer to the target level of 4% in 2024 and the beginning of a process of reducing the key interest rate, currently set at 15% annually.
"Our baseline scenario shows that we will get inflation to the target level of 4% next year, meaning we will be able to start reducing the key rate," she said.
However, she emphasised that the key rate would remain high for some time to allow for the dissipation of inflationary pressures and the absorption of the substantial volume of loans issued in the past year.
At the same time, the central bank is concerned that the expansion of mortgage lending is coupled with higher prices and worsening quality of housing that could trigger future problems.
"Lending to individuals is rising as well, especially in the mortgage segment. Growth is very high here, an increase of 32% y/y, meaning that the mortgage loan portfolio gained one third over the past 12 months," Nabiullina said.
"We are obviously concerned with the fact that this growth is accompanied with an increase of housing prices and worsening of mortgage loans because the loans are provided to the borrowers with an already high debt burden," she added. "It can turn into great risks for the banks and for the borrowers in the future."
In response to these concerns, Nabiullina suggested that discussions between the central bank and the government should explore the differentiation of the cheap mortgage programme. One potential approach could involve differentiation based on income levels to address these challenges effectively.
63 Russia OUTLOOK 2024 www.intellinews.com