Russian Central Bank cuts key rate by 150 bps to 8% pa, sharper than market expectations. By 01:45 pm Moscow time, the dollar rate on the Moscow Exchange accelerated its growth to 58.07 rubles, the euro exchange rate – up to 58 rubles. Read More
“Current consumer price growth rates remain low, contributing to a further slowdown in annual inflation. This is due to both the influence of a set of one-off factors and the subdued consumer demand. Inflation expectations of households and businesses have significantly decreased, reaching the levels of spring 2021. The decline in business activity is slower than the Bank of Russia expected in June. However, the external environment for the Russian economy remains challenging and continues to constrain economic activity significantly,” the regulator said in a press release following the meeting of the board of directors.
“Going forward, in its key rate decision-making, the Bank of Russia will take into account actual and expected inflation dynamics relative to the target and economic transformation processes, as well as risks posed by domestic and external conditions and the reaction of financial markets. The Bank of Russia will consider the necessity of key rate reduction in the second half of 2022,” the CBR said in the press release.
In a Reuters poll earlier this week, most analysts had expected a smaller cut of 50 basis points from 9.5%.
“The Bank of Russia will consider the necessity of a key rate reduction in the second half of 2022,” it said in a statement.
“Apparently the regulator has decided to act more aggressively than previously thought, as inflation is falling faster than in forecasts,” analysts at Promsvyazbank said.
Annual inflation slowed to 15.5% as of July 15, the central bank said, lowering its 2022 inflation forecast to 12-15% from its previous assessment of 14-17%. It reiterated its hope that inflation would fall to its 4% target in 2024.