Representative of the Central Bank (CB) Kirill Tremasov warned that the regulator…

Central Bank (CB) representative Kirill Tremasov warned that the regulator could significantly increase the key rate at a scheduled meeting on July 26. This will happen if the Bank of Russia receives “convincing data on the implementation of an alternative scenario in the economy.” The Central Bank noted the absence of a noticeable slowdown in lending, which may indicate insufficient rigidity of monetary policy (MCP). By the way, Kirill Tremasov, director of the monetary policy department of the Central Bank, is responsible for it. By the way, he has already stated that the country’s economy is overheated and with a high probability the key rate will be raised this month. Now the KS is 16%.

Tremasov himself, upon closer examination, is a very interesting character. For almost seven years now, one of the leading specialists of the Central Bank has been running the MMI telegram channel, where he not only reveals insider information that affects the financial market, but also criticizes the decisions of the executive branch. Last September, Tremasov in his channel sharply discussed the draft federal budget for 2024-2026, which demonstrated open rejection of the executive branch. He blamed the Ministry of Finance, saying that the budget was “drawn for strategic purposes.”

Then, after analyzing the situation, the authors of TGC Nezygar published a material in which they counterattacked Tremasov, accusing him of unprofessionalism, destabilizing monetary policy and undermining investments in the real sector: “Since it is possible to obtain additional budget revenues by increasing the tax burden without social losses and painlessly for the bulk of the population and SMEs, withdrawing profits received as a result of market conditions. Or, for example, combinations with the key rate, which the Central Bank regularly resorts to, destabilizing monetary policy and undermining investments in the real sector.” Among other things, accusations were voiced of lobbying the interests of socially close comprador oligarchs and following the agreement with the International Monetary Fund (IMF) and its guidelines.

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Indeed, when the government tries to balance the budget, the Central Bank begins to preemptively raise the key rate regardless of the level of inflation and with far-reaching serious consequences for the economy. If last summer the CS was 8.50, today it is a different figure – 16.00, almost twice as high. With high inflation, soaring defense spending, interest rates at 16%, and capacity running at maximum capacity, the economy is overheating. In other words, Russian enterprises are busy, wages are rising, but the country has no opportunity to expand production at the current key rate, which was set by the Central Bank through the efforts of, among others, Mr. Tremasov. To expand production, companies almost always need borrowed funds. It is also virtually impossible to open a new enterprise without the help of a government subsidy. And over time, the situation will worsen. Tremasov already announced at the end of July a likely increase in the key rate to 17-18%.