. Last Updated: 07/27/2016

Central Bank Trims Refinance Rate

The Central Bank will scale back the refinancing rate effective Monday to an annualized 80 percent from 110 percent, a bank official said Friday.

Interfax quoted a first deputy bank governor, Sergei Aleksashenko, as saying the move reflects increasing stability in the financial sphere since the July 3 presidential election in which President Boris Yeltsin was returned to office.

"Daily monitoring by our experts shows that inflation and yields on government securities have significantly decreased. These and other factors have allowed the Central Bank to decide to lower the refinancing rate," Aleksashenko said. It was the second time within a month the rate was reduced. In late July it was cut to 110 percent from 120 percent, a rate that had been in effect since February.

The Central Bank does not in reality extend loans to commercial banks at the official discount rate, Aleksashenko said.

"The deposit auctions held by the Central Bank allow to place money only at 60 percent per annum. The discount rate is the basic sum for calculating fines, penalties on delayed payments and other payments," he said.

Some experts said the reduction of the refinancing rate to a level comparable to yields on t-bills and interest rates on banking deposits shows that the rate should again become a legitimate market indicator in the near future.