The banking system’s capital stock is adequate to boost lending; we do not foresee any growth in outstanding liabilities and, at the same time, profits are sufficient to enable capital buildup. The question is, what procedure will banks use to assess borrowers’ risks and how will demand for capital rise. The current volume of lending is indeed growing, albeit at a very moderate pace: around 5-7% for this year. Turning now to capital outflow. As we see it, capital outflow is expected to remain steady – in the range of $ billion a year over a three-year horizon. Rossiiskaya Gazeta’s QUESTION:  7 / 14  BIS central bankers' speeches  Mrs Nabiullina, the Bank of Russia has recently closed submission of debt load calculation and use proposals. What feedback did you receive from the market? What is the timeline for the rollout of this instrument? And my second question, if I may. You met the People Bank of China’s governor, discussing yuan-denominated OFZ. Did you reach an agreement on investment quotas for our securities? Thank you. ELVIRA NABIULLINA: As regards the rollout of the debt load indicator, we believe this is absolutely the right approach, and we intend to move forward in this direction. We are still receiving feedback. We will need time to process and consolidate this feedback. No final conclusions are possible at this point, our approach being though that this indicator should be enacted; the timeline and details to be discussed. As for my meeting with the governor of China’s central bank.
Having said that, we do not rule out that a decision may be made at one of our intermediate meetings. Let us have a closer look at the factors behind today’s decision. First, inflation has slowed down considerably. It stood at 5.4% in late 2016 and fell to 4.3% as of 20 March. It is very close to the 4% target. Inflation reduction is driven by a number of factors. Price growth is primarily checked by slack consumer demand. Some indicators suggest that it started to slowly recover in early 2017. However, overall households retain the propensity to save, of which deposits are indicative. Incentives to save are supported by positive real interest rates. Lowering inflation expectations also slow down consumer price growth, though they are still high. Expectation indicators sometimes wobble up and down and we speak about their volatility. Having said that, the most important development is that a downward trend has entrenched. The ruble appreciation triggered inflation to reduce faster than forecast. It has affected all goods and individual services in recent months, especially food prices. Prices for some products, such as fruit and vegetables, even dropped, because they quickly respond to a changing environment. That said, it also means that the situation may abruptly reverse for such goods. Exchange rate movements also decelerated growth in non-food goods and service prices. Another factor is heavy crops last year and in 2015. They have left stocks of farm produce which drag down prices for some food products.