Russia: CBR lowered key rate by 50 bp to 6.50%

The Central Bank of the Russian Federation (Bank of Russia) on Friday announced that it cut its policy rate by 50 basis points to 6.5%.  

The USD/RUB pair largely ignored this announcement and was last seen trading at 63,9489, losing 0.2% on a daily basis. Below are some key takeaways from the bank’s policy statement, per Reuters.

“If the situation develops in line with the baseline forecast, the Bank of Russia will consider the necessity of further key rate reduction at one of the upcoming board of directors’ meetings.”

“Disinflationary risks exceed pro-inflationary risks over the short-term horizon.”

“Pro-inflationary risks posed by budget expenditures growth in the second half of 2019 “” early 2020 hold low because the rise in expenditures is likely to be more distributed over time.”

“Significant risks are posed by elevated and unanchored inflation expectations.”

“The Russian economy’s growth rate still remains subdued. In these circumstances, the Bank of Russia keeps unchanged its 2019 GDP  growth forecast in the range of 0.8-1.3%.”

“Current data suggest that the growth of the Russian economy might accelerate in 2019 QW3, partially driven by temporary factors.”

“Since the beginning of 2019, fiscal policy has had a constraining effect on economic activity.”

“2019-2022 GDP  growth forecasts are left unchanged.”

“Monetary conditions have continued to ease since the last board meeting.”