Central Bank of Russia lowers policy rate by 25 bps to 4.25%

Russia's central bank announced on Friday that it lowered its policy rate by 25 basis points to 4.25% and noted that it will consider the necessity of further rate reductions at its upcoming meetings.

Key takeaways from the policy statement

"Bank of Russia will take into account actual and expected inflation dynamics relative to the target and economic developments over the forecast horizon."

"Disinflationary factors continue to exert considerable influence on inflation."

"Household and business inflation expectations have overall stabilised following a decrease in May and June."

"The recovery of the global and Russian economies will be gradual despite the fact that the easing of restrictions revives economic activity."

"In these circumstances, there is a risk that in 2021 inflation might deviate downwards from the 4% target."

"A significant easing of monetary policy since April aims at curbing this risk and stabilising inflation close to 4% over the forecast horizon."

"The strengthening of the ruble since April largely offset its depreciation in march containing the upward pressure of the exchange rate on consumer prices."

"According to the estimates as of 20 July, annual inflation was close to 3.3%."

"Seasonally adjusted monthly growth rates continued to decline in June and will remain low till the year-end amid subdued demand."

Market reaction

The USD/RUB pair edged slightly higher in the last minutes and was last seen gaining 0.23% on the day at 71.6213.