The Bank of Russia Switches Over to Monetary Policy Easing

Abstract

At its June meeting, for the first time this year, the Bank of Russia Board of Directors decided to cut the key rate by 0.25 pp. to 7.5% per annum. Such a decision was motivated by the plunge of annual inflation in April-May 2019 to 5.1%, coupled with weakening inflation risks. The inflation forecast for 2019 has been revised, the target being reduced from 4.7–5.2% to 4.2–4.7%. The RF Central Bank expects that the annual inflation rate in 2020 will hover around 4%, and so it plans to roundup its transition to neutral monetary policy by the middle of the next year.