Broad definition monetary base growth down by 2.2% m/m in July.

By bne IntelliNews August 8, 2013

Broad definition monetary base increased by 7.9% y/y as of end of July 2013, slowing down from 11.5% y/y seen in June and 14% y/y in May and April, report by the Central Bank of Russia (CBR) shows. In m/m terms broad monetary base decreased by 2.2% m/m. Despite positive m/m dynamics for previous three consecutive months broad monetary base did not recover from January’s 14.5% drop. As of end of August monetary base was at RUB 8.862tn (USD 266bn), RUB 0.99tn or 10.1% ytd lower than as of end of 2012.

The decline of the indicator in July in both m/m and y/y terms is to be attributed entirely to fluctuations in the correspondent accounts and deposits with the CBR. Correspondent accounts with banks declined by 6.6% y/y and 18.5% m/m to RUB 817.4bn in July after gaining 41.2% y/y and 12.2% m/m in June. Deposits with the Central Bank lost 5.7% y/y and 12.4% m/m to RUB 125.7bn in July after going up by 5.7% y/y and 15.4% m/m in the previous month.

Money in circulation remained more stable slipping by 0.1% m/m and maintaining y/y growth of 9%. The indicator amounted to RUB 7,411.5tn as of end of July 2013.

As reported, M2 posted growth of 15.3% y/y in May 2013 vs. 15.2% y/y growth seen in April, according to the data by the Central Bank of Russia (CBR). Q1/13 (average growth of 14% y/y) M2 dynamics followed a stable deceleration of indicator’s growth throughout 2012 (from 22.3% y/y in January 2012 to 19% in June to 11.9% y/y in December 2012). To compare, 20.6% y/y M2 growth was posted in May 2012, 20.1% y/y in May 2011, and 30.7% y/y in May 2010.

M2 inched up by 0.9% y/y in May after 1.4% m/m growth seen in April. In absolute terms M2 amounted to RUB 28.084tn (USD 855bn), cash in circulation was RUB 6.349tn, and non-cash funds were at RUB 21.735tn as of end of May. Cash in circulation remained flat m/m in May after 2.8% m/m increase in April. Non-cash funds went up by 1.1% m/m, m/m growth rate unchanged since March.

The CBR that expected the growth of monetary supply to decline below 20% by the end of 2012, maintained that declining money supply growth rates are going to help curbing inflationary pressures. However, in March and April’s monthly policy releases the central bank signaled the beginning of a softer policy cycle, cutting the rates on long-term operations and recognizing the risks of economic slowdown. In May and June the anticipated cut of the refinancing rate (8.25%) and other main rates was postponed only due to inflation peaking at 7.4% in May.

New head of the CBR Elvira Nabiullina told the press on the decision that the central bank will only cut the rates once a consistent decline in prices is confirmed.

The next meeting of the BoD of the central bank is going to held on August 9 2013. As inflation was recently reported to moderate further to 6.4% y/y in July, the expectations of a more pronounced monetary easing increase. It is not certain that the CBR will cut the refinancing rate by one notch of 25bps already in August, but a cut in main interest rates is likely during Q3/13. 

Related Articles

Russia’s central bank reduces key rate in surprise decision

The Central Bank of Russia (CBR) reduced the key lending rate by 0.25 percentage points to 9.75% on March 24, despite broad market expectations of no change this month. The ruble strengthened to a ... more

Ex-Trump aide Manafort reported to be long-term Putin lobbyist

Paul Manafort, US President Donald Trump's former election campaign manager, struck a covert deal with Kremlin-affiliated Russian oligarch Oleg Deripaska in 2006 to promote the interests of President ... more

Russian central bank governor Nabiullina to be nominated for further five-year term

The governor of the Central Bank of Russia (CBR), Elvira Nabiullina, will be nominated for another five-year term, President Vladimir Putin told the country’s top banker on March 22. The nomination ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss