Russia’s Central Bank Cuts Key Rate

(MENAFN) On Friday, the Bank of Russia opted to trim its benchmark interest rate by 50 basis points, bringing it down to 15.5%, and stated that the national economy is steadily moving back toward a trajectory of balanced expansion.

Financial markets had largely anticipated that the regulator would leave the benchmark rate unchanged at 16%.

With this latest move, the key rate has reached its lowest level in 19 months, marking the sixth straight reduction in borrowing costs.

"In January, price growth accelerated significantly due to one-off factors. However, the Bank of Russia estimates that the underlying measures of current price growth have not changed considerably," the monetary authority said in an official release.

The institution underscored that the disinflation trend is expected to persist once the temporary influences diminish.

"The Bank of Russia will assess the need for a further key rate cut at its upcoming meetings depending on the sustainability of the inflation slowdown and the dynamics of inflation expectations," it added.

Based on projections from the central bank, and taking into account the current monetary policy framework, the benchmark rate is anticipated to fall within a corridor of 13.5% to 14.5% this year. "This means that monetary conditions will remain tight."

The regulator also projected that annual inflation will ease to between 4.5% and 5.5% in 2026. From 2027 onward, yearly inflation is expected to remain aligned with the established target.

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