Central Bank of Russia Cuts Interest Rate Sharply Further

April 29, 2022

The Central Bank of Russia felt sufficient room to implement its second 300-basis point cut this month in its policy interest rate, which now becomes 14.0%.  Officials had been expected to reduce interest rates by just 200 basis points. Its statement of explanation touted the ruble’s recovery to pre-war levels and asserted that with”price and financial stability risks no longer on the rise, conditions have allowed for the key rate reduction.” More monetary relief will follow if the respite for market disorder continues, and at 14.0%, the interest rate is still well above the 8.5% level prior to February. In March-through-December 2021, the central bank had previously implemented six rate hikes, doubling the level from a pandemic low of 4.25%. CPI inflation of 16.7% currently is already above the new rate level, but CBR officials are confidently predicting such will recede to at least 7% next year and settle at 4% in 2024.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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