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RUSSIA-ECONOMY-BANK
Russia cuts key rate as inflation slows
MOSCOW, Dec 14, 2019 (BSS/AFP) – The Russian central bank cut its key
interest rate to 6.25 percent on Friday as inflation continued to slow, and
said it would consider further reductions in the first half of 2020.
“Inflation slowdown is overshooting the forecast,” the bank said in a
statement.
“If the situation develops in line with the baseline forecast, the Bank of
Russia will consider the necessity of further key rate reduction in the first
half of 2020.”
Inflation slowed to 3.4 percent as of December 9, the bank said.
The central bank said it expected inflation to range between 2.9 percent
and 3.2 percent at the end of the year.
“Policymakers will probably want to see just how far inflation falls in
early 2020,” Capital Economics said in a note.
“With inflation falling to 3.5 percent in November (below the 4 percent
target) and likely to drop further in the coming months, we think another
25bp cut at the next meeting, to 6.00 percent, is more likely than not.”
The bank said the GDP growth rate would gradually increase from 0.8-1.3
percent in 2019 to 2-3 percent in 2022.
During a meeting with representatives of European business circles in
Russia on Thursday, Economy Minister Maxim Oreshkin said weak consumer demand
and low inflation would continue in the first half of next year.
The Bank of Russia board of directors will hold its next key rate review
meeting on February 7.
BSS/AFP/HR/1005