Russia’s central bank cut its key interest rate by 25 basis points, to 14.25%, the regulator announced on its website.
The bank’s board of directors noted that “economic growth continues at a moderate pace after a temporary slowdown at the beginning of the year.”
“Underlying price growth, according to Russia’s central bank’s assessment, has declined slightly but remains broadly in the 4–5% annualized range. Lending growth has accelerated in recent months. Fiscal policy over a three-year horizon will be more stimulative than previously expected. This may require a higher key rate path than was assumed in the April baseline scenario,” the bank said in its statement.
Most analysts surveyed by the Russian business outlet RBC had expected a 50-basis-point cut — what would have been the sixth consecutive reduction. In their view, current inflation and economic activity data, combined with a strong ruble, gave grounds to expect Russia’s central bank to continue easing monetary policy.
Experts attributed the more modest 25-basis-point adjustment to “heightened risks on the fiscal side.”
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