Bank of Russia cuts interest rate by 25 bps, likely to further lower rates in months ahead

As expected, the Bank of Russia lowered its key interest rate by 25 basis points to 7.5 percent today. The annual inflation continues to be low, while inflation expectations are falling progressively. Short-term pro-inflationary risks have reduced. Thus the balance of inflationary and economic risks has shifted a bit towards the risks to economic growth.

The uncertainty over the situation in global financial markets has increased. Annual inflation is much less likely to surpass 4 percent in 2018, stated the central bank. The central bank in its statement said that the Bank of Russia will “continue to reduce the key rate and may complete the transition from moderately tight to neutral monetary policy in 2018”.

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