Russia's Defense Ministry says US-led coalition unlikely to launch battle for Raqqa soonRussian Politics & Diplomacy March 25, 19:06
Russia cuts oil production by 185,000 barrels per day as of today — energy ministerBusiness & Economy March 25, 18:30
OPEC has no objections to speed of Russia's oil production cutsBusiness & Economy March 25, 12:38
Opposition leader Vladimir Neklyayev detained in Belarus - news agency directorWorld March 25, 5:33
Russia submits amicus curiae brief to US Supreme CourtRussian Politics & Diplomacy March 25, 3:34
Russia, China suggest for UN SC to adopt resolution on chemical terrorism threatRussian Politics & Diplomacy March 25, 3:23
Russian lawmaker compares European Union to Soviet UnionRussian Politics & Diplomacy March 25, 3:16
Russian emergencies ministry says fire at Kazan’s gunpowder factory fully extinguishedWorld March 25, 3:01
Relations btw US, Russia worst over half-century - Lukin quoting KissingerRussian Politics & Diplomacy March 25, 2:58
MOSCOW, September 16. /TASS/. The Russian Central Bank decided to lower the key rate by 0.5 percentage points to 10% for the first time since June, according to the regulator’s press release published on Friday.
The Central Bank has decided to lower the key rate, taking into account slowdown of inflation according to the forecast, as well as inflation expectations at the remaining unsustainable economic activity.
"The Central Bank expects that the decision to lower and maintain the key rate at 10% per annum will reduce inflation expectations. Currently, the structure of market interest rates before maturity and the poll results show that market participants predict a more rapid decline of interest rates than the Central Bank," the regulator said.
At the same time, according to the Central Bank’s estimates, in order to consolidate the trend towards a steady decline of inflation, it is necessary to maintain the achieved level of the key rate until the end of 2016 with the possibility of reducing it in the Q1 - Q2 of 2017.
"To confirm the trend towards a steady decline in inflation, the Central Bank finds it necessary to maintain the achieved level of the key rate until the end of 2016 with the possibility of its reduction in the first-second quarters of 2017," the regulator said.
The press release also noted that, given the decision to lower the rate and at the same time maintaining a moderately tight monetary policy, annual inflation will be around 4.5% in September 2017 and will reach the target level of 4% at the end of 2017. At the same time, the risks of failure to reach a specified target level still exist.
"The risks of inflation not reaching the target level of 4% in 2017 remain. This is connected mainly to the inertia of inflation expectations and a possible weakening of incentives of households for savings," the Central Bank said.
The ruble is stable against the dollar and the euro after the decision of the Central Bank to lower the key.
Thus, the dollar exchange rate before the publication of the Central Bank’s release (at 13:30 MSK) reached the level of 65.06 rubles, after 13:30 MSK dollar fell to 65.05 rubles. The euro exchange rate before the Central Bank’s press release totaled 73.03 rubles, after - fell to 73.01 rubles.
However, after 15 minutes after the announcement of the results of the today's meeting of the Central Bank’s Board of Directors meeting, the dollar and the euro fell below 65 rubles and 73 rubles, respectively. By 13:45 MSK the dollar exchange rate once again reached around 64.96 rubles, which is 19 kopecks higher than at the closing of Thursday’s trading session, and the euro has returned to 72.92 rubles - 6 kopecks higher than at the closing of Thursday’s trading session.
According to the regulator, the growth rate of Russia’s GDP in 2017 will be below 1%.
"Positive quarterly growth of GDP is expected as soon as in the second half of 2016, but in 2017 the growth rates of the GDP will not be high - below 1%," the Central Bank said.
"This forecast is based on the conservative prerequisites of the low growth rate of the world economy, the average annual oil price of around $40 per barrel, and preservation of structural limitations of the Russian economy," the Russian Central Bank said.
The institution has warned that moderately-tough monetary conditions would remain in the Russian economy for quite a long time.
"In fact, the potential reduction in nominal rates is limited, and moderately tight monetary conditions will persist in the economy for quite a long time. This is due to the need to maintain positive real interest rates at a level that will ensure the demand for lending that does not lead to an increase in inflationary pressure, as well preserve the incentives to make savings," the regulator said.