Russian central bank keeps key rate at 9%
Moscow, Russia - Russia’s central bank hit the pause button on rate cuts on Friday, deciding to hold off following three consecutive reductions amid a slight uptick in inflation.
The bank insisted ‘short-term and mid-term inflation risks persist’ as it announced in a statement that it was sticking at the present nine per cent rate.
It said, however, that it is looking to resume its policy of lowering the rate to revive economic growth and ‘sees room’ for cuts ‘in the second half of 2017’.
‘While making its decision hereinafter, the Bank of Russia will assess inflation risks, the inflation dynamics and economic developments against the forecast’, it added.
After slowing to 4.1 per cent in May, consumer price inflation has rebounded to 4.4 per cent now, the bank’s statement said, slightly above the four per cent target. But the bank connected this ‘short-term rise’ with ‘bad weather conditions’ that have impacted the price of fruits and vegetables in recent months.
Global economic research company Capital Economics said on Friday that it expected inflation to fall back to the central bank’s target ‘towards the end of the year’.
‘As a result, we continue to expect more interest rate cuts than the markets are currently pricing in’, the group said.