Why is the rate still 14% if price growth has already slowed down?
On November 9, Elvira Nabiolina explained why the central bank is keeping the rate high. The regulator estimates the stable part of inflation, without temporary spikes, at 5-6%. The gap with the rate is really big.
According to the explanation of the head of the central bank, one of the reasons is the expectations of people and businesses. If you are sure that everything will go up by 10% or more, investing a small percentage seems unattractive. I want to make the purchase now that it is cheaper. This behavior supports demand and prevents the slowdown of prices.
The second reason is preferential loans. Borrowers under government programs feel less strongly about the high interest rate. Therefore, as the central bank explains, to curb overall demand, market loans must be made more expensive.
For those who are waiting for a cheap loan, the signal is still discreet. Neviolina said that in September and October a rate reduction was not even considered.
We would not include a quick refinance in the calculation of a new purchase. If the loan is valid only on the condition that in a few months the payment will decrease, it is better to immediately recalculate the budget according to the existing conditions for the entire period.