The Bank of Russia Plans to Reduce the key Rate in 2019
OREANDA-NEWS The Bank of Russia plans to return to the reduction of the key rate in late 2019 - early 2020.
Earlier, an increase in the key rate by 0.25% (from 7.25% to 7.5%) allowed the ruble to strengthen. According to the Central Bank, the increase was dictated by the increased risk of inflation against the background of the expected new us sanctions against Russia.
The September decision of the Central Bank to raise the key rate is quite moderate, it will allow "in the not-too-distant future" to return to the cycle of monetary policy easing . This information Director of the monetary policy Department of the Central Bank Alexei Zabotkin said at a meeting of the expert Committee of the State Duma.
"25 basis points is a very moderate increase in the interest rate, and we very much hope, as the President noted at the press conference, that this decision, which was taken in a balanced way, will allow us to return to the reduction of the nominal interest rate in the not-too-distant future. At the moment, the Central Bank expects this to happen at the end of 2019 — the beginning of 2020", — said A. Zabotkin.
As reported, in September the Bank of Russia on the background of strengthening preinflation and geopolitical risk raised its key interest rate by 0.25 percentage points to 7.5% and also extended the moratorium on the purchase of foreign currency in the framework of fiscal rules by the end of this year.
Following the results of the previous three meetings, the Board of Directors of the Central Bank decided to keep the key rate at 7.25% per annum. At the beginning of last year, the rate was 10% per annum, at the beginning of 2018 — 7.75%. The decision to raise the rate was the first since 2014.
Until the end of the year, two more meetings of the Central Bank Board of Directors at the key rate are planned: October 26 and December 14.