Central Bank of Russia Cuts Interest Rate Again

September 16, 2022

the Central Bank of Russia’s policy interest rate was sliced by 50 basis points to 7.5%, which is only about half as much as August’s 14.3% year-on-year rate of Russian CPI inflation. According to a released statement, Russian GDP is liable to contract 4% or slightly more this year, and subdued consumption should promote a decline of inflation to around 6% next year and 4% in 2024. To protect financial market functionality, the interest rate had been jacked up a combined 1150 basis points last February. Forex and capital controls subsequently promoted stability, and today’s reduction follows declines of 300 basis points each in April and May and then drops of 150 basis points each in June and July. A remaining concern is that measures of expected inflation in Russia remain elevated amid uncertainty related to the war with Ukraine, which has already lingered almost seven months.

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

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