Russia Monetary Policy April 2017


Russia: Bank Rossii cuts key rate to 9.25%

April 28, 2017

Russia’s Central Bank (CBR) eased rates for a second consecutive meeting on 28 April, cutting the key rate from 9.75% to 9.25%. The move surprised market analysts who had expected a slimmer 25 basis point cut.

Falling inflation and signs that economic activity is reviving drove rate-setters to cut interest rates. Price pressures eased in Q1 and the battered domestic economy continues to limit inflation. At the same time, economic activity is showing signs of broadening according to recent data and consumer and business sentiment have picked up. In addition, the ruble has gained strength in recent weeks.

The Bank’s forward guidance in the accompanying statement was vague. The CBR pointed out that risks to the inflation outlook remain in place and stressed that future decisions would depend on inflation and economic dynamics, along with evolution of oil prices. The Central Bank will hold its next monetary policy meeting on 16 June.

The analysts we surveyed this month expect the Central Bank to continue cutting interest rates in the second half of the year and forecast the interest rate to end this year at 8.23%. Economists see the Central Bank lowering the monetary policy rate further in 2018, with an average Consensus of 7.14%.

Author: Angela Bouzanis, Senior Economist

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Russia Monetary Policy Chart

Russia Monetary Policy April 2017 0

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

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