Russia Monetary Policy


Central Bank holds rate in October

At its latest policy meeting on 5 October, the Central Bank left the refinancing rate unchanged at 8.25%, in a move expected by market analysts. The decision follows on a 0.25 percentage-point rate hike at the previous meeting on 13 September. Simultaneously, the Central Bank left the overnight deposit rate unchanged at 4.25% and the overnight repurchase rate at 5.50%. In the accompanying statement, the Central Bank acknowledged a pick-up in consumer prices in recent months amid the continued rise in food prices at a global and domestic level. In September, inflation rose above the Central Bank's 5.0%-6.0% target range for this year and reached 6.6%, the highest level in ten months. That said, demand-pull inflation pressures remain subdued amid early signs of cooling economic activity. According to market analysts, the phrasing of the ending statement suggests that the Central Bank will maintain a wait-and-see approach in the coming months and, in particular, gauge the impact of earlier monetary tightening on the slowing economy, before embarking in further monetary tightening in response to rising inflation. Against this backdrop, on 27 September the Central Bank increased next year's inflation target range from its previous 4.5%-5.5% to a range of between 5.0% and 6.0%. In the analysts' view, the new target eases pressure on the Bank to tighten monetary policy further, thus reducing the probability of additional rate hikes in the coming months.

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Russia Monetary Policy Chart

Russia Monetary Policy October 2012

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

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