The Central Bank of Russia cut its policy rate by 50 basis points to 7.50%.
During the war period that started with Russia's attack on Ukraine, the Central Bank of Russia raised the policy rate by 10.5 points to 20%.
6th interest rate cut after the war
After raising interest rates to 20% at the beginning of the war, the Central Bank made its first rate cut by 300 basis points in April. Later in the month, another rate cut of 200 basis points was made.
After cutting interest rates by 300 basis points in May, 150 basis points in June and 50 basis points in July, the Central Bank of Russia cut interest rates by 50 basis points at today's meeting. Thus, it brought the interest rate to the October level.
The Central Bank of Russia expects inflation to be between 11% and 13% this year. In 2023, inflation is expected to fall to 5%-7% and in 2024 it is expected to be 4%.
The Bank noted that the external environment for the Russian economy remains risky, but indicators point to good economic activity in the country.
Monetary policy depends on inflation and budget
Stating that the economy and inflation movements are highly dependent on fiscal policy decisions, the decision text emphasized that if the budget deficit widens further, tighter monetary policy may be needed to return inflation to target in 2024 and then keep it close to 4%.
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