Russia Monetary Policy


Central Bank hikes rate unexpectedly

At its latest policy meeting on 13 September, the Central Bank raised the refinancing rate by 0.25 percentage points to 8.25%, in a move that was not expected by market analysts. In addition, the Central Bank raised the overnight deposit rate to 4.25% from 4.00% and the overnight repurchase rate at to 5.50% from 5.25%. According to the accompanying statement, the decision reflects a pick-up in inflation expectations amid the continued increase in consumer prices in recent months. The Central Bank maintains that the developments of Russian and global food prices will be a potential source of inflationary risk going forward, while signalling that the recent acceleration in core prices might suggest an increasing role of monetary factors in the evolution of inflation. Later in the month, the Central Bank increased next year's inflation target range from its previous 4.5%-5.5% to a range of between 5.0% and 6.0%. According to market analysts, the new target eases pressure on the Bank to tighten monetary policy further, thus reducing the probability of additional rate hikes in the coming months.

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Russia Monetary Policy Chart

Russia Monetary Policy September 2012

Note: Refinancing rate in %.
Source: Central Bank of the Russian Federation (CBR).

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