Banking Sector Sees Fewer Opportunities for Long-Term Consumer Loans Amid High Inflation

Amid high inflation and increased pressure on the banking sector, there are fewer opportunities for long-term consumer loans. According to experts, the regulator has acknowledged the possibility of reducing the refinancing rate, but is not in a hurry, despite the market's concerns about the dangers of deflationary fluctuations.

Investment bankers have shared their expectations, with some predicting that inflation could drop below 2% in May. Lasha Kavtaradze of G&T Economist recommends that the regulator lower the interest rate by at least 0.5% at the next MPC meeting, which is scheduled for May 10. Kavtaradze believes that the decline in inflation is irreversible, and that there are no risks of revolution.

Othar Nadaraya, Chief Economist of TBC Capital, expects the main rate to decrease to 9.5% by the end of the year, with the first correction from the regulator expected at the upcoming MPC meeting. According to Nadaraya, regardless of the monetary policy decision on May 10, the tone of communication will be softened, which will speed up the process of reducing interest rates.

As inflation remains high and the banking sector faces increased pressure, the market is no longer confident in the feasibility of extending the term of consumer loans. It remains to be seen how the regulator will respond to these concerns, and whether a free market approach will be adopted to encourage growth and development in the banking sector.