Russia Monetary Policy


Central Bank cuts USD-RUB swap rate

At its policy meeting on 14 June, the Central Bank left the refinancing rate unchanged at 8.00%, in a move that was largely expected by market analysts. In addition, the Central Bank left both the overnight deposit rate unchanged at 4.00% and the overnight repurchase rate at 5.25%. At the same time, the Bank reduced the rate on USD-RUB swap transactions to 6.5% from 8.0%. According to the Central Bank, reducing the swap rate will improve the ability of lenders to raise liquidity in roubles from the Bank, limiting the volatility of money market rates and increasing the effectiveness of the monetary policy transmission mechanism. Meanwhile, inflation remains subdued, despite having picked-up in June. According to the Central Bank, planned increases in regulated prices and tariffs, which come into effect this month, will lead inflation to creep up in the second half of the year and to end 2012 within the Bank's 5.0%-6.0% target range.

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