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Bank of Russia may switch to neutral monetary policy more quickly

February 16, 14:25 UTC+3 MOSCOW

The Board of Directors of the Bank of Russia will hold its next meeting on the key rate on March 23

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© Stoyan Vasev/TASS

MOSCOW, February 16. /TASS/. The existing balance of risks suggests the possibility of a faster transition from moderately tight to neutral monetary policy, the Bank of Russia’s department of research and forecasting stated in the bulletin "What the Trends Say".

"The economic activity continues to expand forming a path of slow but steady growth. The slowdown in growth at the end of 2017 was focused in specific sectors and was most likely caused by one-time factors, which may last in early 2018. The existing balance of risks speaks of the possibility of a more rapid transition from a moderately tight to a neutral monetary policy that can be completed already this year," the regulator says.

On February 9, the Board of Directors of the Bank of Russia at its first meeting this year decided to lower the key rate by 25 basis points to 7.5%. In its press release, the regulator noted that annual inflation remains at a consistently low level, while inflation expectations are gradually declining. "Short-term pro-inflationary risks have abated. Therefore the balance of inflationary and economic risks has shifted slightly towards the risks to economic growth. The uncertainty over the situation in global financial markets has increased. This year annual inflation is much less likely to exceed 4%. In this environment the Bank of Russia will continue to reduce the key rate and may complete the transition from moderately tight to neutral monetary policy in 2018," the regulator said.

The Board of Directors of the Bank of Russia will hold its next meeting on the key rate on March 23.

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