Russia Monetary Policy


Russia: Central Bank lowers refinancing rate and narrows overnight corridor

December 23, 2011

On 23 December, the Central Bank cut the refinancing rate by 25 basis points to 8.00%, in a move that surprised market analysts who had expected the rate to remain unchanged. In addition, the Central Bank raised the overnight deposit rate from 3.75% to 4.00%, while maintaining the overnight repurchase rate at 5.25%, thus narrowing the overnight rate corridor by 25 basis points. The Bank decided to cut rates, as price pressures continue to ease, with inflation ending the year at a post-Soviet era low. According to the Central Bank, the narrowing of the overnight rate corridor will reduce volatility, as banks are facing tighter liquidity conditions. In addition, the move will improve the effectiveness of the monetary policy. Market analysts believe that, going forward, the Central Bank will shift the focus of its policy stance towards economic growth, as a favourable inflation outlook provides leeway for further cuts in the refinancing rate.

Author:, Head of Data Solutions

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