BCN-07 Russian central bank cuts rates despite market uncertainty

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ZCZC

BCN-07

RUSSIA-ECONOMY-BANK-RATE

Russian central bank cuts rates despite market uncertainty

MOSCOW, Feb 10, 2018 (BSS/AFP) – Russia’s central bank cut interest rates
on Friday — the seventh consecutive reduction in borrowing costs — and said
it would likely continue to ease monetary conditions in future as inflation
risks fade, despite the current market uncertainty.

“The Bank of Russia board of directors decided to cut the key rate by 25
basis points to 7.50 percent,” the bank said in a statement.

“Annual inflation remains sustainably low” and “short-term pro-
inflationary risks have abated,” the central bank explained.

“Therefore the balance of inflationary and economic risks has shifted
slightly towards the risks to economic growth,” the statement said.

At the same time, the central bank said that uncertainty over the
situation in global financial markets had increased.

Nevertheless, with annual inflation “much less likely to exceed four
percent this year, in this environment, the Bank of Russia will continue to
reduce the key rate and may complete the transition from moderately tight to
neutral monetary policy in 2018,” it said.

Russia last cut its key rate by half a percentage point to 7.75 percent in
mid-December and some analysts had been expecting a reduction of a similar
magnitude this time round.

Capital Economics’ economist William Jackson suggested “it was only the
sell-off in global financial markets over the past week that prevented a
larger cut.”

Bank of Russia board is scheduled to hold its next policy meeting on March
23.

Central bank chief Elvira Nabiullina said in December that Moscow aims to
bring rates down to between six and seven percent within one or two years.

BSS/AFP/HR/0940