Russia Monetary Policy


Central Bank remains on hold

At its latest policy meeting on 10 June, the Central Bank left the refinancing rate unchanged at 8.25%, in a move expected by market analysts. Simultaneously, the Bank left the overnight deposit rate unchanged at 4.50% and the overnight repurchase rate at 6.50%. However, Bank Rossii shaved 25 basis points off longer-term refinancing facilities from six to 12 months.

According to monetary authorities, recent indicators point to a moderation in economic growth. In addition, the Bank believes that there are downside risks to the economic outlook amid weak investment activity and subdued external demand. Regarding price developments, Bank Rossii acknowledged the recent pick-up in inflation - largely explained by food prices and regulated tariffs - but maintains its assessment that inflation will move back within its 5.0% - 6.0% target range in the second half of 2013.

According to analysts, the phrasing of the final statement - which did not contain a reference to the appropriateness of the current monetary policy stance - leaves the door open for a rate cut in the coming months. In addition, former Putin's economic aide Elvira Nabiullina will officially become Chairman on 24 June, which could mark a shift towards a more accommodative stance as early as next month.

Against this backdrop, FocusEconomics Consensus Forecast panellists anticipate the refinancing rate to close the year at 7.77%. For 2014, the panel expects the rate to end the year at 7.46%.

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Russia Monetary Policy Chart

Russia Monetary Policy June 2013

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

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