28 Apr 2020 14:16

CBR reiterates, strengthens monetary policy signal: scale of shock requires broad steps, economy to require low-cost funds

MOSCOW. April 28 (Interfax) - The Central Bank of Russia (CBR), which cut its key rate by 50 basis points last Friday for the first time in six months and said that further monetary easing was possible at its next meeting, has reiterated its dovish signal and even strengthened it somewhat.

"We must be able to mitigate the blow to the economy and, just as importantly, ensure a rapid recovery once the restrictive measures are eased and lifted. You know, last Friday we decided to cut the key rate to 5.5% per annum. And we moved on to a stimulus-minded monetary policy. It will be important for the economy to get support, including relatively low-cost funds, first and foremost after the "unfreezing," Central Bank Governor Elvira Nabiullina said during a meeting on banking sector activity at the State Duma.

"This is why we are emphasizing that we still have the potential to further reduce the rate. And, understanding the nature and scale of the economic shock we are now facing, we are saying that we can reduce the rate in larger steps than before," she said.

The CBR said in its commentary to the decision on April 24 that "if the situation develops in line with the baseline forecast, the Bank of Russia holds open the prospect of further key rate reduction at its upcoming meetings." At the press conference on Friday, Nabiullina allowed for the possibility that the key rate might be cut by 100 bp before the end of the year.