The Central Bank warned about the risks of mass use of preferential loans
Quick Look
The massive use of preferential loans will lead to the need to keep the key rate at an increased level, said Andrei Gangan, director of the monetary policy department of the Bank of Russia.
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Why It Matters
The Bank of Russia comments on the consequences of the widespread use of preferential lending for the economy.
Massive use of government support in the form of preferential loans will lead to the fact that the key rate will have to be kept at an elevated level or raised. The director of the monetary policy department of the Bank of Russia, Andrei Gangan, spoke about this, TASS reports.
According to him, all ideas in one way or another related to differentiating the key rate for various sectors of the economy come down to government financing, and in fact, to an attempt to highlight privileged companies that receive cheaper money.
The regulator believes that the use of such tools is possible for targeted, targeted and short-term support, but not on an ongoing basis.
“If we set up incentive measures of this kind for a wide range of industries and sectors of the economy, then, other things being equal, this will lead to the fact that the key rate will be higher, which means that financing will be more expensive for all other industries,” he concluded.
Open Questions
- Which industry programs can be cut?
- How will other market participants react to the Central Bank’s words?
