Russia Central Bank Unexpectedly Cuts Key Rate, Signals More Reduction
24 Marzo 2017 - 1:39AM
RTTF2
Russia's central bank unexpectedly reduced its key interest rate
on Friday, after holding it steady for three sessions in a row, and
said it could lower it further as inflation slowdown was
faster-than-expected amid an economic recovery though risks remain
elevated.
The Board of Directors decided to reduce the key rate from 10.00
percent to 9.75 percent, the Bank of Russia said in a
statement.
Policymakers noted that inflation slowdown overshoots the
forecast, inflation expectations continue to decline and economic
activity recovers. However, inflation risks have slightly dropped
but remain elevated, they added.
"In these circumstances, given the moderately tight monetary
policy, the 4 percent inflation target will be achieved by the end
of 2017 and will be maintained at this level further," the bank
said.
"While assessing evolving inflation dynamics and economic
developments against the forecast, the Bank of Russia admits the
possibility of cutting the key rate gradually in coming Q2-Q3."
The bank forecast inflation to ease to 4 percent by the end of
this year and will remain within this target range in 2018-2019.
Price growth was 4.3 percent in the first twenty days of March
versus 5 percent in January.
Moderately tight monetary policy will allow to limit their
effects and maintain consumer price growth rates close to 4
percent, the bank said.
That said, rate-setters noted that risks that inflation will
miss the 4 percent target by year-end have abated, but they remain
in the medium term.
Economic growth was also proceeding at a faster-than-expected
pace, the bank said. The bank forecast GDP growth of 1-1.5 percent
this year and by 1-2 percent in 2018-2019.
The bank said that the forecast is based on the assumption of an
oil price reduction to $40 per barrel by the end of 2017.
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