Rus­sian cen­tral bank keeps key rate at 9%

Muscat Daily - - BUSINESS -

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.

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