Bank of Russia

December 15, 2017

Russia’s key monetary policy rate has been reduced by a greater-than-expected 50 basis points to 7.75%. A main reason why central bank officials were able to slice 50 basis points from their interest rate as they did in September and April rather than 25 bps was was done in October, June, and March is related to the recent oil production agreement. According to a released statement from Governor Elvira Nabiullina, “with oil producers having agreed to extend the output cut deal, there is less uncertainty now. This is a powerful drag on the relevant pro-inflationary risks. We have updated our macroeconomic forecast to reflect these developments.” The statement goes on to note that inflation is falling despite strengthening growth because of the tight monetary stance, the ruble’s better tone, and falling price expectations. Inflation is projected to be around the 4% target late in 2018.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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