Bank of Russia reduces the interest rate to 7.5%

The institution said that "the economic slowdown of annual inflation is continuing"

The Bank of Russia has decided to lower the benchmark interest rate by 25 basis points, to stand at 7.5%, due to the deterioration of economic conditions in the country, as reported this Friday.

“The economic slowdown of annual inflation is continuing,” the monetary authority stressed, adding that Russia’s economic growth in the first half of 2019 has been “lower” than the Bank of Russia expected.

In addition, the board of directors of the Russian issuing institute has warned that if the situation is developed according to the main forecast of the Bank of Russia, there is the “possibility” that there will be another drop in interest rates in any of its next meetings with the objective of “transitioning” towards a neutral monetary policy towards the middle of 2020.

Inflation in Russia stood at 5.1% in the month of May, from 5.2% in April. The Bank of Russia has attributed this fall to “trends in consumer demand” and to temporary factors, such as the appreciation of the ruble.

At its meeting in March, the entity maintained interest rates but admitted the possibility of a single reduction during 2019.

On the other hand, the body chaired by Elvira Nabiullina has stressed that the change of the roadmap of the Federal Reserve of the United States, which will not raise the interest rates during this year and, even, could get to lower them, according to the consensus of the market, “reduces the risks” of capital outflows from emerging markets, including Russia.

K. Tovar

Source: Eldiario

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