M2 Growth Has Slowed for a While
The Central Bank published statistics yesterday on the money mass (M2), which, on October 1, stood at 14.4 trillion rubles. According to the Central Bank’s definition, M2 is the volume of money in circulation (outside banks) and the funds in the national currency remaining in the accounts of nonfinancial organizations and individual residents of the Russian Federation. According to that data, the M2 growth rate on October 1 had slowed to 25.1 percent compared with the same period last year.
That number, with due attention to the crisis in bank liquidity that broke out in full force in September, could hide significant potential for lowering inflation, which had reached 11.2 percent on October 20. Finance Minister Alexey Kudrin calculates that the share of monetary inflation last year was 56 percent, which is directly tied to the overwhelming growth of monetary indicators. In 2007, the monetary exceeded the planned growth rate of 29 percent to rise 52 percent.
The reduced M2 annual growth rate as of October 1 creates at least one problem. The liquid assets of Gazprombank, deposited in the Central Bank, were 170 billion rubles as of October 1, Oleg Sontsev of the Center for Macroeconomic Analysis and Short-Term Forecasting. Before the auction of YUKOS assets, they had never exceeded 30 billion rubles. That was reflected in the M2 last year. To free itself of the YUKOS factor, 140 billion rubles have to be “cleansed” from the calculations for October 1. Even with that adjustment, the slowdown in M2 growth is slight – 26.6 percent.
The slowdown in M2 is unlikely to last more than a month or two. By the end of the year, the September and October cash injections into the banking system by the Central Bank will probably be reflected. They have exceeded 1 trillion rubles.
www.kommersant.com
All the Article in Russian as of Oct. 28, 2008
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