Russian CB Governor Could Cut Rates Next Week

Russia’s central bank is likely to consider cutting its key interest rate by 25 or 50 basis points when policymakers meet next week, governor Elvira Nabiullina said on Thursday.

Her comments were the clearest indication of the bank’s thinking on rates since mid-2013.

Nabiullina told an annual meeting at the finance ministry that a faster than expected slowdown in inflation had opened the door for a rate cut at the bank’s April 28 meeting.

“I even suppose that at the next board meeting, which will take place in a week from now, a 25 and 50 basis point rate cut will be discussed,” she said.

Annual inflation has hit a post-Soviet-era low of 4.1 percent, data released on Monday showed, although it remains a touch higher than the bank’s 4 percent target.

Nabiullina’s suggestion that the central bank may be ready for a 50 basis point cut, which would bring the key rate to 9.25 percent, means the pace of monetary easing this year could be quicker than previously thought.

The central bank, which last cut its key rate to 9.75 percent from 10 percent in March, has previously said that borrowing costs should remain 2.5-3 percentage points above inflation to ensure monetary policy remains moderately tight. “When carrying out monetary policy, we will stick to a weighed, accurate approach, taking into account risks and uncertainties, including dynamics of oil prices,” Nabiullina told the gathering at the finance ministry.

via Kitco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza