The Central Bank of Russia cut the policy interest rate from 9.5% to 8.0% on the 10th. The reduction of 150 basis points (bp) exceeded market expectations. He said he would consider the need for further cuts as inflation slows and the economy slows.
This is the fourth rate cut this year. In a Reuters survey earlier this week, most analysts expected a 50 basis point cut.
"We will consider the need to reduce the policy rate in the second half of the year," the central bank said in a statement.
"It seems that the authorities have decided to act more aggressively than previously thought, as inflation is declining faster than expected," said an analyst at the Russian domestic bank.
According to the central bank, inflation as of July 15 slowed to 15.5% year-on-year. The inflation rate forecast for 2022 has been lowered from the previous 14-17% to 12-15%. He also reiterated the prospect that inflation will drop to the target of 4% in 2024.
In addition, the central bank has set its outlook for gross domestic product (GDP) growth this year at -4-6%. It was expected to shrink by 8-10% in late April. On the other hand, the growth rate forecast for 2011 is -1 to 4%, and the previous forecast of a maximum reduction of 3% has been revised.
"The external environment surrounding the Russian economy remains harsh and severely constrains economic activity. Consumer spending remains sluggish, but it is beginning to recover, with a gradual increase in consumer goods imports," the central bank said.
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