Analysts Expect Russian Central Bank to Hold Rate

Russia’s central bank will hold its main lending rate at 17 percent when it meets on Friday, even though the economy is likely to contract by 4.2 percent this year, a Reuters poll predicted on Thursday.

The bank jacked the rate up in mid-December at an emergency meeting provoked by a run on the rouble, as sliding oil prices and Western sanctions linked to the Ukraine conflict sparked financial turmoil.

An escalation of fighting in eastern Ukraine is adding to the economic pressures, with the European Union warning this week that further sanctions against Russia are planned.

“The economy is heading toward a recession in 2015,” said ING economist Dmitry Polevoy. “Double-digit inflation is another evil that is not likely to ease its grip quickly.”

Out of 12 analysts polled by Reuters, 11 expected the central bank to hold its key rate this month, with one predicting a one-point cut.

via Reuters

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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