Bank Rossii Gives Hint of Future Rate Change

July 16, 2012

The Central Bank of Russia did not change its interest rate structure this month.  That includes an 8.0% refinancing rate, which was adjusted three times in 2011 but not so far in 2012.  Rate hikes were implemented last year in February and April but cut in December.  All three moves were by 25 basis points.  A couple of months prior to the directional policy reversal in December, monthly statements from the central bank, which provide some qualitative guidance to future policy, had implied that the pause in policy might be drawing to a close.  The same thing happened this month.  In June and prior months, officials had said current policy should be appropriate for coming months, but today’s statement modifies that language to “the current level of money market interest rates is appropriate for the near future. The Bank of Russia will continue to monitor inflation risks and the influence of global economic developments on the Russian economy. In making monetary policy decisions the Bank of Russia will rely on medium-term inflation goals and economic growth prospects, as well as the dynamics of inflation expectations.”  Consumer prices rose 5% in the year to July, and GDP is deemed to be expanding near its potential speed limit.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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