Russia: CBR keeps policy rate unchanged at 7.75%, hints at possible rate cut in Q2/Q3

The Central Bank of the Russian Federation (CBR) has recently announced that it kept its policy rate unchanged at 7.75% in a widely expected decision. Below are some key takeaways, via Reuters, from the CBR’s monetary policy statement.

• If the situation develops in line with the baseline forecast, the Bank of Russia admits the possibility of turning to cutting the key rate in Q2-Q3 2019.
• Annual inflation passed the local peak in March and started to subside in April. Consumer prices current growth rates track somewhat below the Bank of Russia forecast.
• In April, inflation expectations of households rose slightly after a tangible drop in March.
• Annual inflation will return to 4% in the first half of 2020.
• Consumer prices current growth rates tend to be somewhat below the Bank of Russia’s forecast.
• VAT increase pass-through to prices has largely materialised.
• Consumer demand trends constrain inflation.
• Temporary disinflationary factors contributed to slowing consumer price growth, among those ruble appreciation since the beginning of the year.
• Monetary conditions have seen no significant changes since the last board meeting.