Bank of Russia: Monetary Policy Settings Stay on Hold

May 10, 2012

Bank Rossii implemented three changes of its refinancing rate last year, hikes of 25 basis points each in February and April and a cut of 25 bps on December 23rd.  After this month’s meeting, the Board of Directors left the key rate at 8.0%, its level since the cut in December.  Officials are balancing President Putin’s goal of nearly doubling economic growth with the basic mandate of preserving price stability.  Headline inflation was at 3.6% in April, but the core inflation rate was somewhat greater than 5.0%.  In a new statement, officials warned, “Inflation will rise in the second half of the year as a result of a forthcoming increase in the majority of regulated prices and tariffs as well as a fading disinflationary effect from food prices observed earlier. However, the Bank of Russia expects inflation to be within the target range at the end of 2012. The uncertainty regarding the scale of influence of this factors on inflation expectations remains a significant source of medium-term inflation risks.”  The statement also called the 8.0% refinancing rate “appropriate.”

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



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