“Disinflationary factors continue to have a significant impact on inflation. After declining in may and June, inflation expectations of population and business in General has stabilized. Although the easing of restrictive measures on the revival of economic activity, the recovery of the global and Russian economy will be gradual,” says Central Bank release rate.
In these conditions there is a risk of deviations of inflation down from 4% in 2021, as stated in the Central Bank. The Bank of Russia, taking into account the monetary policy annual inflation at 3.7-4.2% in 2020, from 3.5 to 4% in 2021 and will be located near the target of 4% thereafter.
With the development of the situation in the baseline forecast, the Bank of Russia will assess the feasibility of further lowering the key rate at the next meeting, said the regulator.
the New key rate again renewed its historical minimum reached at the previous meeting, when the rate fell to 4.5%. The Bank of Russia reduces the key rate for more than a year, since the beginning of last summer, it has fallen by 3.5 percentage points. And at the last meeting in June, the Central Bank lowered it from one percentage point (the usual step – 0.25, or 0.5 percentage points) due to the low rate of inflation due to depressed demand and the need to promote put the brakes on the pandemic and related constraints of the economy.
Today’s meeting was actually devoid of intrigue about the movement rates, the only question was the step reduction. So, last week the head of the Bank of Russia Elvira Nabiullina, speaking in the Federation Council, said that the regulator sees room for further rate cut due to low inflation.
the Reduction of the key rate leads to a decrease in the cost of basic banking products – deposits (average maximum rate of the big banks them now also at a historic low of just above 4.5%) and loans. The easing of monetary policy helps the economy overall because it will make more affordable loans to companies and citizens. Citizens and businesses have the opportunity to refinance loans at lower interest rate to reduce its debt burden and free up resources for consumption and investment.
the Next meeting of the Board of Directors of the Bank of Russia will examine the level of the key rate, will take place on 18 September.
