The Central Bank of Russia (CBR) has cut the key interest rate from 11.5% to 11.0% citing growth as a priority. The rate cut is already the 5th consecutive one this year.
Last Friday, the Central Bank of Russia (CBR) said in a statement the following:
Major macroeconomic indicators demonstrate further economy cooling. The Bank of Russia estimates GDP decrease in 2015 Q2 compared with the similar quarter last year to be more significant than that in Q1 2015 (…)
Annual inflation will fall below 7 percent in July 2016 and reach the 4 percent target in 2017. The Bank of Russia will further decide on its key rate depending on the balance of inflation risks and risks of the economy cooling.
The Russian ruble continued its decline following the Central Bank’s rate cut decision and was trading at
- 61.09 against the dollar
- 67.72 against the euro
on the Moscow Exchange at 17:37 MSK according to RT.
Generally the weaker ruble means more expensive imported goods which is not the best news for Russian consumers and producers.
The Central Bank of Russia (CBR) also said that
the economic situation in Russia will further depend on the dynamics of world energy prices and the economy’s ability to adapt to external shocks.
It’s highly probable that oil prices will remain below $60 per barrel for a long time. It’s worth noting that this level of probability was much lower back in June.
The Central Bank of Russia (CBR) will be meeting again on 11 September 2015 to discuss further monetary policy.
The ruble recovered in Q1 this year to an average of 55 against the US Dollar. This week it fell to a 4-month low, trading at 60 against the greenback. The currency weakness is predominantly due to falling oil and commodity prices as well as the stock market crash in China.
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