Central bank of Russia cuts policy rate by 150 bps to 9.5%
10.06.2022, 10:50

Central bank of Russia cuts policy rate by 150 bps to 9.5%

The Central Bank of Russia announced on Friday that it cut its policy rate by 150 basis points to 9.5% from 11%. In its policy statement, the central bank noted that it will consider the necessity of key rate reductions at its upcoming meetings.

Additional takeaways per Reuters

"According to the Bank of Russia’s forecast, given the current monetary policy stance, annual inflation will total 14.0–17.0% in 2022, decline to 5.0–7.0% in 2023 and return to 4% in 2024."

"This comes as a result of ruble exchange rate movements and the tailing-off of the surge in consumer demand in the context of a marked decline in inflation expectations of households and businesses."

"Moving forward, in its key rate decision-making the Bank of Russia will take into account actual and expected inflation dynamics relative to the target and economic transformation processes, as well as risks posed by domestic and external conditions and the reaction of financial markets."

"Monetary conditions are overall tight, having softened unevenly across various segments of the financial market."

"High-frequency indicators point to a halt in the decline in business activity in May after it dropped sharply in April."

"Enterprises are still struggling to fix production and logistics."

"Consumer activity in real terms is on the decline as households show a high propensity to save and real incomes shrink."

"The external environment for the Russian economy remains challenging and significantly constrains economic activity."

Market reaction

The USD/RUB pair is down more than 3% at 57.3250 following this announcement.

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