by Andrey Ostroukh
MOSCOW (Reuters) – Russia’s central bank on Friday cut its main key interest rate by 50 basis points to 7.5% on Friday, taking advantage of slowing inflation to further ease monetary policy, but it ceased to refer to the possibility of a further reduction in the cost of credit.
Russia’s key rate hit 20% before Moscow sent armed forces to Ukraine on Feb. 24, but the central bank cut it shortly afterwards to 9.5%, setting off a downward cycle that has continued in recent months. .
The half-point cut decided on Friday is in line with the consensus forecasts of economists and analysts compiled by Reuters in recent days.
The monetary policy statement, unlike the previous ones, does not mention the possibility of an additional reduction but explains that the inflation expectations of households and companies remain high.
This development suggests that the likelihood of further rate cuts has diminished.
“There is no direct signal in today’s press release. It is a clear indication that the rate cut cycle may be over,” commented CentroCreditBank economist Yevgeny Suvorov.
The central bank explains that it will take into account, during its next meetings, the evolution of observed inflation and price expectations as well as the risks linked to the internal and external situation and the reactions of the financial markets.
Inflation in Russia reached 14.1% on September 9 and should be between 11% and 13% by the end of the year, she continues, adding that she hopes to bring it down to between 5% and 7% in 2023, then to 4%. in 2024.
It specifies that a tightening of monetary policy could be necessary to achieve this objective if the budget deficit increases.
The institution maintains its forecast of a contraction of the Russian economy of 4% to 6% this year but specifies that the final figure could be closer to 4%. In April, she mentioned an 8% to 10% drop in gross domestic product (GDP).
(Report Andrey Ostroukh, French version Marc Angrand, edited by Kate Entringer)