Russia Monetary Policy


Central Bank leaves rates unchanged

On 28 October, the Central Bank decided to leave the refinancing rate unchanged at 8.25%, in a move that was widely expected by market analysts. In addition, the Central Bank maintained the overnight repurchase rate at 5.25% and the overnight deposit rate at 3.75%, thus leaving the overnight rate corridor unchanged. The Bank had narrowed the overnight rate corridor by 50 basis points in September, in order to reduce interest rate volatility. The Central Bank stated that inflation continued to drop (September: 7.2%; August: 8.2%) but acknowledged that the pace of moderation could slow going forward as the positive effect of lower food prices wears out in the coming months. In addition, the continued pick-up in consumer demand, reflected in improving retail sales figures and sustained by a continued increase in consumer lending, could further boost inflationary pressures. Market analysts believe that the Central Bank's decision was in effect intended to curb domestic credit growth and prevent possible overheating in domestic demand, with the ultimate aim of meeting the 7.0% inflation target for this year.

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