/INTERFAX-AFI, Moscow, February 2, 08/ - Bank of Russia, having increased all key rates of money market and assessments for banks to fund of compulsory reserving (FCR), had bring the striving to replenish the banking system with liquidity to sacrifice of anti-inflation measurements. Such conclusion was made by analysts, questioned by Interfax-AFI agency.

On Friday CB RF announced about realization of measurements, aimed on holding of inflation and decrease of dynamics of money mass.

Since March 1 the regulator increased the norm of compulsory reserves on compulsory liabilities of credit organizations to physical entities in currency of RF to 4.5% (currently acting 4%), on liabilities of banks-nonresidents in currency of RF and foreign currency - to 5.5% (from 4.5%). On other liabilities of credit organizations in currency of RF and liabilities in foreign currency the norm was increased from 4.5% to 5%.

Simultaneously is increasing the coefficient of averaging out for estimation of value of compulsory reserves from 0.4 to 0.45.

Except this, CB increased by 0.25% all key rates on money market. Rate of refinancing was increased since February 4 to 10.25% form 10% APR.

New steps of CB increased the impression of last months about growing macro-economic role of Bank of Russia. If earlier in public filed CB mainly was noted as banking regulator and key player on currency market, than since second half-year of last year the situation started to change. When unfavorable conjuncture on world market had caused the liquidity crisis in Russia, CB reacted unexpectedly rapidly and fully, having undertaken the number of measurements for satisfying of money starvation. Now CB is in front of difficult task - to win the inflation, which had speed up in year 2007 and do not going to stop in the beginning of this year, despite the approaching president's election, at that not leaving the economy without sources for development.

Balancing between inflation and economic growth - in this difficult task there are from whom to study. Many years with solving of this task is dealing the American central bank - Federal reserve system (FRS) and actions of Bank of Russia are now similar to actions of colleagues from USA.

"Our aim is to walk by thin line, in order not to admit the inflation and struggle with it won't crush the production", - the phrase of deputy chairman of Bank of Russia Gennadiy Melikyan on the press-conference in Interfax several hours before increase of rates by its composing and inner logic is sending to announcements of committee of opened markets of FRS USA, for which the market is expecting not less than decisions of American CB on rates.

The similarities soon had continued - in the announcement of CB, dedicated to change of rates, for the first time was contained the motivating part, though composed very briefly: "With aims of holding of inflation and decrease of dynamics of money mass on February 1, 2008 directors' board of Bank of Russia accepted the decision about change of level of refinancing rate of Bank of Russia, interest rates on operations, conducted by Bank of Russia and norms of compulsory reserves". Of course, yet it is not three classical paragraphs of announcement of committee of opened markets of FRS, which may send all world indices to knock-out or lead them to new records, but earlier CB had never explained the logic of its actions.

Even more so, usually its was enough obvious and was not connected to tasks for provision of urgent macro-economic help. Now CB have only to set the accurate number of sessions of Board of directors per year on questions of rates and announce them beforehand, and so the similarity with FRS will be total.

CB RF had left to a track of war with inflation.

Experts converge in opinion, that the Central Bank under the order of the government has started active struggle against inflation by means of available tools.

By opinion of senior economist of "Troyka Dialog" Eugene Gavrilenkov, measures undertaken by CB RF are enough logic in terms of growing inflation - 12% by results of year - and accelerating growth in January average annual evaluation.

"In principle, it to some extent is contradicting to strive of CB RF to raise the liquidity, and this is the major problem. Most likely, the inflation before elections was considered as the more major problem, than the liquidity of banking system - the compromise shifted to the side of inflation", - the senior economist of Merrill Lynch in Russia and CIS Julia Tsyplyayeva considers. Apparently, situation with inflation is really unfavorable, she supposes.

By the words of analyst of investment bank "Trust" Eugene Nadorshin, instead of helping the banking sector by decrease of FCR, CB is "tightening nut". "In the light of events on world financial markets I would like to wait form CB the radically opposite measures, excluding increase of averaging coefficient", - he is wondering. E.Nadorshin explains the decisions of CB RF as effect from recent sessions about anti-inflation measures, as result of which the regulator intends to undertake the monetary measures immediately. "I think that the priority of struggling with inflation is dominating", - he told.

In October 2007 CB RF decreased the norms of FCR to level of 3% on liabilities of credit organizations to physical entities in currency of RF and to 3.5% - on liabilities to banks-nonresidents in currency of RF and in foreign currency, and on other liabilities of credit organizations in currency of RF and liabilities in foreign currency.

Decreased norms were affective during 3 months since October 11. Since January 15, 2008 CB RF had return the norms to former level, which is acting currently.

Then CB explained its decision by realization of measures, aimed on widening of abilities, provided to credit organizations, on receiving of financing from Bank of Russia due to significant decrease of liquidity level of banking sector in the third quarter of year 2007, connected to crisis events on international financial markets.

Dangerous game

Experts are estimating ambiguously the influence of undertaken measurements for access of banks to money on the market.

"Now people are doubting. People are afraid, starting from people in commercial banks, and finishing with people in real sector, which are depending from them. Because the banks have problems with long money, and FCR is almost withdrawing the long money", - E.Nadorshin is exasperated. "Now you won't hear any enthusiastic scream, only groans and curses", - he supposes.

"In conditions of growth of money mass by 40-60% annually, it is ridiculous to say that money are not enough. Money are enough - the problem is that they are not circulating, the intensive overflow is absent, it is the problem of trust.

Large banks are communicate between each other, and small do not have access to credit resources", - E.Gavrilenkov considers, naming the measures of CB as "cure of symptoms" but not the "reasons of illness". "According to normal logic, for stable functioning of system without appearing of "bubbles", to which the cheap money are leaving, Central bank have to credit banks at rate, exceeding the inflation level. In the end of year 2007 CB RF was crediting banks under 6.1% with inflation rate at 12%, provision of credits under -6% - is the nonsense of course", - he notes.

By opinion of analyst, problem is that in RF the mechanism of refinancing is not working. "At first it has to appear the need in refinancing, that it will be possible to speak about curing of problem. Now the reality is different", - E.Gavrilenkov considers.

By opinion of expert of "Troyka Dialog", large bank have limited and not so free as in second quarter of last year possibility to borrow on external markets, despite all existing problems. The threat of liquidity deficit due to worsening in the end of month with tax payments may appear, but it won't be critical. "but it should not be forgotten, that inflation accelerated, and rate is still negative, so I do not expect some dramatic influence", - E.Gavrilenkov told.

Senior economist of Alfa-bank Natalya Orlova considers that increase of FCR for banks is not critical. Growth on liabilities in foreign currency by 0.5% will extract from banks 10-20 bn. rubles considering increase of average coefficient, she supposes. Measures of CB, from her point of view, are "light" enough, and "won't bring the significant damage to banks' liquidity". So increase of rates of one day's REPO should be perceived as signal of that CB is recognizing, that in the light of growing inflation and [presenting liquidity deficit the interest rates won't be reduced, and is moving the cost of its resources to market", - N.Orlova notes.

Chairman of directors' board of MDM-bank Oleg Vyugin, which also was the deputy minister of finances, senior economist of "Troyka Dialog", first deputy chairman of CB and head of Federal service of financial markets, considers that increase of outflows to FCR may reduce volumes of crediting by 30-40 bn. rubles. By his words, the decision of CB firstly on compulsory deductions, will lead to increase of rates on crediting.

Meanwhile, E.Gavrilenkov is doubting, that these measures of CB will help in struggling with inflation. "It will help only partly, and insignificantly. What we can expecting from dynamics of prices, when expenses of budget are growing with such rates as our'? So all that is imitation of struggling with inflation", - he considers.

E.Nadorshin from "Trust" is fearing, whether CB should in future suddenly decrease the rate, as not FRS of USA is doing, in order to cover the deficit of liquidity. "FRS already had struggled with inflation in the end of last year, and now they will aggressively help the inflation, suddenly decreasing the rate. For only January - 1.25%. As if we should not do that", - he says.

"I think, CB will act according to situation. If the liquidity crisis forms, rates of FCR possibly will be decreased, and it will start the new round of discussion - what to do with ruble", - Y.Tsyplyayeva from Merrill Lynch supposes.

[2008-02-04]