Bank of Russia holds key rate at 11%; inflation risks remain at fore

By Susanna Moon

Chicago, April 29 – The Bank of Russia’s board of directors voted to maintain its key rate at 11% on Friday, as “inflation risks remain elevated,” according to a bank statement.

If inflation risks fall, the bank said it will resume a gradual lowering of its key rate, with annual inflation projected at about 5% in April 2017 and reaching the 4% target in late 2017.

In the meantime, inflation slipped noticeably amid weaker consumer price growth driven by the moderately tight monetary policy; however, the “trend bears risks of instability,” the bank said.

Also, key macroeconomic indicators point to “higher resistance” of Russian’s economy to volatile oil prices, the bank said. The floating exchange rate helps set off the impact of external shocks, the bank noted.

Interest rates are set to fall further even with the key rate unchanged, the bank said, which is due to the planned reserve fund spending to finance the budget deficit and the ensuing change in the banking sector to a liquidity surplus.

As reported, the bank also decided to keep the key rate unchanged at its last meeting in March.

© 2015 Prospect News.
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