Central Bank lowered its key interest rate to 11% – RBC

Photo: Oleg Yakovlev / RBC

The Board of Directors of the Bank of Russia on Friday, July 31, decided to reduce the key rate c 11,5% to 11%. The regulator explained by the fact that “the balance of risks is still biased towards a significant cooling of the economy».

The dynamics of the main macroeconomic indicators point to a further cooling of economic activity. According to the Bank of Russia, the decline in GDP in the second quarter to the same period last year was more significant than the first. “Although structural factors continue to have a dampening effect on economic growth, decline in output currently has including the cyclical nature. This is evidenced by the low level of consumer and business confidence, reduction in capacity utilization and the labor force “, – stated in the decision of the regulator.

The decision of the Bank of Russia coincided with the consensus forecast of economists compiled by RBC on Thursday, on 30 July. The consensus forecast of economists surveyed by RBC predicts that the regulator will reduce the rate to 11%.

The chief economist for Russia and CIS, “Renaissance Capital” Oleg Kuzmin said that the decision of the Central Bank to lower the rate was expected. “The reason for this was the favorable outlook for inflation in 2015-2016. The Bank of Russia does not expect growth in consumer demand, and this creates a good environment disinflation “- he explains. The expert also recalled that the Ministry of Finance published in early July forecast indexation of pensions and salaries to state employees – it will be very moderate, which also reduces inflationary expectations.

According to Kuzmin, the effect of the decision of the Central Bank in the market, including ruble exchange rate will be minimal. “Firstly, the market expects this decision, secondly, the ruble is now more responsive to the dynamics of oil prices. Now it is close to the fair level “, – he said.

Total in 2015 the Central Bank reduced its key rate four times already. Prior to that, on February 2 it was reduced from 17% to 15% per annum, March 16 – from 15% to 14%, 5 May – from 14% to 12,5%.

The next meeting of the Board Directors of the Bank of Russia, which will consider the question of the level of the key rate, scheduled for September 11, 2015. “In the future, the Bank of Russia will decide on the level of the key rate, depending on the change in the balance of inflationary risks and risks of the cooling economy,” – said in a press – release CB.