Bank of Russia holds key rate at 10%, as inflation expectations ease

By Susanna Moon

Chicago, Feb. 3 – The Bank of Russia’s board of directors decided to keep its key rate unchanged at 10% on Friday.

Inflation has remained in line with forecasts, and inflation expectations are easing steadily as the economy recovers faster than expected, according to a bank statement.

Inflation is expected to edge down to the 4% target by late 2017 and sustain this level, which limits the bank’s ability to cut its key rate in the first half, the bank noted.

The country’s demand exerts a “disinflationary effect,” the bank said.

To “anchor sustainable inflation slowdown driven by demand-side restrictions, monetary conditions should remain moderately tight,” the bank noted.

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