Russian Central Bank cuts key policy rate to 6.25% from 6.5%


  • Bank of Russia cuts policy rate by 25 basis points in December.
  • Bank says it will asses further cuts in first half of 2020.
  • USD/RUB largely ignores the policy decision, continues to trade in 2019 lows.

Russia’s central bank on Friday announced that it cut its key interest rate by 25 basis points to 6.25%. The USD/RUB pair largely ignored this decision and was last seen trading at 62.3795, losing 0.73% on a daily basis.

Key takeaways from the policy statement

"Disinflationary risks still exceed pro-inflationary risks over the short-term horizon."

"Will consider the necessity of further key rate reduction in the first half of 2020."

"Monetary policy easing that has already been undertaken may have a stronger upward effect on inflation than the Bank of Russia estimates."

"Pro-inflationary risks posed by budget expenditure growth in 2020 hold low because the rise in expenditures is likely to be distributed over time."

"Growth rate may be close to the upper bound of the Bank of Russia forecast of 0.8–1.3%."

"Going forward, the rise in government expenditures, including investment ones, will contribute to economic growth."

"GDP growth rate will gradually increase from 0.8–1.3% in 2019 to 2–3% in 2022."

"Will assess the effect of the adopted key rate decisions on monetary conditions and inflation movements."

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