Bank of Russia cuts key policy rate
On September 6 the Bank of Russia lowered its key policy rate by 25 basis points. It is now 7%. This was widely anticipated. The move was actuated by a persistent slowing of inflation as well as poor economic growth. Inflation is now down to 4.3% YoY in August. The Bank of Russia (CBR) has a target of 4%. The CBR changed its growth forecast to a mere 0.8%-1.3%. CBR is not too concerned about inflation now feeling that risk has been mitigated. The potential risk was due to high spending on national projects such a road and rail construction. There is a chance that the CBR will cut the rate again before the end of 2019. The policy rate is now the lowest since 2014. It is in what the CBR regards as a neutral range now. Now economic growth is the government's responsibility. The CBR can no longer be accused of hampering the economy due to a high interest rate.