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Cheap loans no remedy for consumer demand - Nabiullina

Low interest rates and cheap loans won't help sustain stable consumer demand at a high level. This requires the recovery of household revenues, the Bank of Russia's Elvira Nabiullina said speaking at the VTB Capital Russia Calling forum today.

'It goes without saying that the fiscal and monetary policies are aimed at supporting demand, but I'l like to note that they are not omnipotent. It would be way too simple to believe that demand is defined by pure monetary and fiscal policy. Think like people out there are thinking. We want them to consume more, but even if interest rates are very low, but people won't know when their income will start recovering, and how sustainable that recovery is going to be, whether they will keep their jobs - they aren't going to start spending money,' — said Nabiullina emphasizing that like in many other countries households would rather be saving, as a precaution.

She pointed out that companies will be behaving likewise, since cheap loans are not enough to assure their stability.

«Same goes about companies: no matter how cheap available credits are, one needs to understand the demand, supply opportunities, the works, before they expand operations and invest. These are the things to take note of. I agree that the quality and targeted nature of expenses will support confidence, but they key factor here is healthy income recovery,' she emphasized.

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