Bank of Russia Left Refinancing Rate at 8.25%

May 16, 2013

Russia’s main monetary policy signal has been at 8.25% since the middle of September 2012 and will continue at that level.  Last September saw the rate increase by 25 basis points, reversing a 25-bp cut made late in December 2011.  Government officials had urged the Bank of Russia’s Board of Directors to sanction an ease because growth has slowed to its lowest pace since 2009.  But a statement from Bank Rossii officials rejected that advice because inflation of 7.2% is 1.2 percentage points above its 5-6% price target.  As a concession to growth, however, bank officials voted “to reduce effective from 16 May 2013 the interest rates on certain longer-term operations by 0.25 percentage points” and asserted that this move “brings the cost of obtaining liquidity from the Bank of Russia by credit institutions closer to the interest rates on the Bank of Russia main liquidity provision operations, which will contribute to strengthening the interest rate channel of the monetary policy transmission mechanism.”

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



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