Russia’s central bank announced on Friday that it lowered its policy rate by 50 basis points to 5.5% as largely expected. With the initial reaction, the USD/RUB pair edged slightly lower and was last seen down 0.32% on a daily basis at 74.5320.
Takeaways from the policy statement
“If the situation develops in line with the baseline forecast, the Bank of Russia holds open the prospect of a further key rate reduction at its upcoming meetings.”
“In its key rate decision-making, the Bank of Russia will take into account actual and expected inflation dynamics relative to the target and economic developments over the forecast horizon.”
“Significant restrictive measures have been introduced to combat the coronavirus pandemic both in Russia and across the world, which negatively influences economic activity.”
“This creates material and prolonged disinflationary influence on price dynamics from the aggregate demand perspective.”
“At the same time the situation in global financial markets has stabilised after a period of particularly high volatility in March.”
“The bank of Russia has reviewed its baseline forecast scenario and is shifting to accommodative monetary policy.”
“According to the Bank of Russia’s forecast, given the monetary policy stance, annual inflation will reach 3.8-4.8% in 2020 and will stabilise around 4% later on.”
“This year and further on will be largely influenced by a steep decline in domestic and external demand.”
“The drop in demand will become a significant disinflationary factor due to the current and deferred economic effect of the restrictive measures introduced to combat the spread of the coronavirus pandemic in Russia and globally.”
“According to the Bank of Russia’s baseline forecast, given the monetary policy stance, annual inflation will reach in 2020 and will stabilise around 4% later on.”
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