50 Basis Point Central Bank Interest Rate Cut in Russia

June 11, 2016

Russian monetary authorities reduced their key interest rate to 10.5% on Friday from 11.0% and released a statement that emphasized improved inflation dynamics.  ” Inflation risks shaped by the dynamics of budget expenditures, inflation expectations and oil prices were subdued. Certain advances in nominal wage growth did not drag on inflation. Those positive price dynamics installed more confidence, allowing for further expectations of a sustainable inflation reduction to the 4% target in 2017.”  This was the first easing in eleven months. The rate had been cut to 11.0% then from 17.0% at end-2014.  The statement indicates that more rate cuts may be undertaken: “The Bank of Russia will consider the possibility of a further key rate cut based on estimates for inflation risks and alignment of inflation decline with the forecast trajectory.”

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

 

 

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