Russia Monetary Policy


Bank Rossii on hold but rate cuts are in the pipeline

At its latest policy meeting on 15 May, 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 off further 25 basis points on all longer-term refinancing facilities (three to 12 months), mirroring a similar decision at the previous meeting in April.

Monetary authorities remain concerned regarding the economic outlook, as indicators available point to a continuing deceleration in economic activity. Risks to the inflation outlook remain subdued and Bank Rossii maintains its assessment that inflation will move back within its 5.0% - 6.0% target range in the second half of 2013.

Once again, the final statement did not present any reference to the appropriateness of the current monetary policy stance. According to analysts, the phrasing leaves the door open for a rate cut in the coming months in the event that subdued growth data provide a case for further monetary easing.

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 May 2013

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

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