Central Bank of Russia once again trims key rate by 50 bps to 16% pa

MOSCOW. Dec 19 (Interfax) - The board of directors of the Central Bank of Russia has decided to lower the key rate for the fifth time in a row, trimming it once again by 50 basis points to 16% per annum.

Most experts had forecast a cut of 50 bps to 16% pa, while others had expected a reduction of 100 bps to 15.5% pa.

"The economy continues to return to a balanced growth path. Underlying measures of current price growth declined in November. However, inflation expectations have edged up in recent months. Lending activity remains high," the regulator said in a press release following the decision.

"The Bank of Russia will maintain monetary conditions as tight as required to return inflation to the target. This means that monetary policy will remain tight for a long period. Further decisions on the key rate will be made depending on the sustainability of the inflation slowdown and the dynamics of inflation expectations," it said.

The rate was cut by 50 bps at the last meeting also, on October 24, to 16.5% per annum. It was lowered 100 bps at the meeting prior to that on September 12, and 200 bps to 18% on July 25. The regulator cut the rate for the first time in 2.5 years on June 6, by 100 basis points, from 21%.

The Central Bank kept the rate at 21% per annum for four consecutive meetings prior to June after raising it 200 bps from 19% on October 25 last year. At the meeting on December 20, 2024, the CBR decided to keep the rate at this level, although most analysts expected it to increase. The regulator held the rate on February 14, March 21 and April 25.

The Central Bank's next rate-setting meeting is on February 13.