Russian Key Interest Rate Left Unchanged at 7.75%

August 31, 2010

Bank Rossii left the Russian refinancing rate at a record low of 7.75%.  It has been at that level since a 25-basis point cut effective last June 1st.  From April 2009 until then, there were fourteen reductions totaling 475 basis points.  Consumer price inflation of 5.5% in the year to July was less than half as much as in the prior statement year to July 2009.  Officials are not satisfied with the pace of economic recovery (5.2% between 2Q09 and 2Q10).  It’s still well below what Russia experienced prior to the world financial crisis and is likely to slow slightly over the coming year.  Indeed, growth between 2009 and 2011 will offset the steep drop of GDP last year by only a little.  As an energy exporter, Russia enjoys a current account surplus of about 5% of GDP and has smaller relative government fiscal deficit than one typically finds in Europe.  The rouble is trading about 2% above its year-ago dollar level.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



Comments are closed.