vendredi 13 mars 2015
Bank of Russia cuts key rate to 14.0%
Posted on 03:50 by nice news
On 13 March 2015, the Bank of Russia Board of Directors decided to reduce the key rate from 15.00 to 14.00 percent per annum taking into account that the balance of risks is still shifted towards a more significant cooling of the economy. This decision will contribute to the reduction of these risks without posing an additional threat of increased inflationary pressure. According to Bank of Russia forecast, the current monetary policy and low economic activity will be conducive to the slowing of annual consumer price growth to 9% over the year (March 2016 on March 2015) and to the target of 4% in 2017. As inflation risks abate, the Bank of Russia will be ready to continue cutting the key rate.
As of 10 March, annual consumer price growth rate stood at 16.7%. Core inflation increased to 16.8% in February, while monthly consumer price growth declined from 3.9% in January to 2.2% in February. The high level of annual inflation is caused primarily by the supply-side factors, i.e. the ruble depreciation and external trade restrictions. Their impact is short-term and will be exhausted before the end of 2015. At the same time, demand-side inflation factors’ dynamics show a pronounced downward trend. A surge in consumer activity at the end of last year was temporary. January 2015 saw a continued fall in real wage growth and a sharp decline in consumer expenditures which exerts a restraining influence on the prices of goods and services.
Current monetary conditions will contribute to consumer price growth decline. Annual money supply (M2) growth rate decreased considerably as compared with the beginning of 2014. Given lending rates hike and tighter borrower and collateral requirements, annual lending growth (adjusted for currency revaluation) slowed down. Despite the key rate cut, it remains rather high for the deposit rates to support the public’s propensity to save.
Structural factors continue to exert a
As of 10 March, annual consumer price growth rate stood at 16.7%. Core inflation increased to 16.8% in February, while monthly consumer price growth declined from 3.9% in January to 2.2% in February. The high level of annual inflation is caused primarily by the supply-side factors, i.e. the ruble depreciation and external trade restrictions. Their impact is short-term and will be exhausted before the end of 2015. At the same time, demand-side inflation factors’ dynamics show a pronounced downward trend. A surge in consumer activity at the end of last year was temporary. January 2015 saw a continued fall in real wage growth and a sharp decline in consumer expenditures which exerts a restraining influence on the prices of goods and services.
Current monetary conditions will contribute to consumer price growth decline. Annual money supply (M2) growth rate decreased considerably as compared with the beginning of 2014. Given lending rates hike and tighter borrower and collateral requirements, annual lending growth (adjusted for currency revaluation) slowed down. Despite the key rate cut, it remains rather high for the deposit rates to support the public’s propensity to save.
Structural factors continue to exert a
Bank of Russia cuts key rate to 14.0%
Categories: Bank of Russia cuts key rate to 14.0%
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