CBR slashes key rate by 300 bps to 17.00% per annum
MOSCOW. April 8 (Interfax) - The Central Bank of Russia (CBR) board of directors has made a decision to reduce the key rate by 300 basis points (bps) starting on April 11, 2022 to 17.00%, the regulator said in a statement.
"Today's decision reflects a change in the balance of risks of accelerated consumer price growth, decline in economic activity and financial stability risks," the CBR said.
External conditions for the Russian economy are still challenging, considerably constraining economic activity. Financial stability risks are still present, but have ceased to increase for the time being, including owing to the adopted capital control measures. There is a steady inflow of funds to fixed-term deposits, the regulator said.
Annual inflation will continue to rise due to the base effect. Yet, the latest weekly data point to a noticeable slowdown in the current price growth rates, including owing to the ruble's exchange rate dynamics, the CBR said.
On February 28, an extraordinary meeting of the regulator's board decided to hike the key rate from 9.5% to 20%. This decision, as the CBR explained at the time, was to increase deposit rates to levels necessary to compensate for increased devaluation and inflation risks. In mid-March, the Bank of Russia kept the rate at 20%.
The tightening of monetary conditions already in place is partly offset by the lending support programs launched by the government and the CBR, but it will continue to limit pro-inflationary risks.
The next CBR board meeting to consider the key rate is due on April 29, 2022.
In its further key rate decisions, the regulator will take into account risks posed by external and domestic conditions and the reaction of financial markets, as well as actual and expected inflation dynamics relative to the target and economic developments over the forecast horizon, and holds open the prospect of further key rate reduction at its upcoming meetings.