Russian Central Bank Indicates Interest Rate May Be Cut Later this Year

March 22, 2019

The Central Bank of the Russian Federation maintained a one-week repo rate of 7.75% after its latest monetary policy review. The key interest rate was increased a quarter of a percentage point twice last year in September and then in December, but a statement released today revised projected inflation this year downward by 0.3 percentage points to a range of 4.7-5.2% The statement then suggests that the next rate change is likely to be downward in direction.

Should the situation unfold according to our baseline forecast, we hold open the prospect of a key rate reduction somewhat sooner than we assumed back in December last year. We do not rule out that this may occur in 2019. The Bank of Russia will make its key rate decisions, as it always does, taking into account inflation and economic dynamics against the forecast as well as risks posed by external conditions and the reaction of financial markets.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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