The Central Bank of Russia has just announced a decision to reduce key interest rates from 12.50% to 11.50%, explaining the move with “lower inflation risks and persistent risks of considerable economy cooling”.
In an announcement, accompanying the decision on the key interest rates, the regulator noted:
“Inflation risks emanate primarily from aggravation of external economic situation, enhanced inflation expectations, revision of increases in administered prices and tariffs planned for 2016-2017, and fiscal policy easing.
The Bank of Russia will be ready to continue cutting the key rate as inflation risks abate and inflation declines further in compliance with the forecast but the potential of monetary policy easing will be limited by inflation risks in the next few months.”
The latest move by the Bank of Russia comes as the Ruble seems to be losing ground against the US Dollar. This weakening is explained by falling oil prices, as well as by the “dividend season” in Russia, along with the policy the country’s central bank has undertaken to dissuade speculators from carry trade.
Chart source: Barchart
Russia’s central bank cut the key interest rates on January 30th, March 13th and April 30th this year. The new key interest rates will be implemented from June 16, 2015 .
For the official announcement on the latest key interest rates move, click here.