Russian Interest Rate Left Unchanged

March 15, 2013

The Bank of Russia‚Äôs Board of Directors kept its refinancing rate at 8.25%, the level since a 25-basis point hike last September and also the level prior to a 25-bp cut in December 2011. A statement on Bank Rossii’s web site calls “the current level of money market interest rates appropriate for achieving the balance of the main macroeconomic risks,” that is to say providing a balance between the risks of continuing above-target inflation and slower economic growth. The latest on-year CPI increase of 7.3% surpasses the average 6.6% pace in 2012 and the target range of 5-6%.  Inflation is expected to stay above 6% throughout the first half of 2013, and the statement warns that prolong above-target inflation may lift expected inflation.  Commenting on trends in Russian output and demand, the statement notes that “the growth rates of investment in productive capacity remained subdued and the retail sales growth decelerated. The industrial output decreased. At the same time, economic confidence indicators remain overall positive,and labor market conditions together with credit expansion provide support to the domestic demand.”

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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