Russia Monetary Policy


Bank Rossii stays put as expected

At its 8 November meeting, Bank Rossii left the one-week repo rate unchanged at 5.50% as market analysts had expected.

Bank Rossii maintains a somber outlook on the country's economy According to the Central Bank, recent indicators suggest a continued slowdown in economic growth. The Bank believes that economic growth will remain low in the medium term due to subdued investment and sluggish external demand. Regarding price developments, Bank Rossii acknowledged the pick-up in inflation in October, which came on the back of "non-monetary factors", including a rise in prices for fruits and vegetables, which was "unusual for this season." The Central Bank believes, however, that the increase in food prices will be brief. In its statement, Bank Rossii dropped its previous reference to inflation remaining within the target range until the end of 2013, but did indicate that it expects inflation to moderate further in 2014.

Monetary authorities are still concerned about the need to anchor inflation expectations before launching an easing cycle. The Central Bank concluded its statement by noting that, "more pronounced downward trends in inflation expectations need to be formed to ensure the achievement of inflation goals in the medium term."

Against this backdrop, FocusEconomics Consensus Forecast panelists expect 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 November 2013

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

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