Central Bank lowers key rate to 7%. It’s low in 2014

The Central Bank of Russia took a decision to reduce the key rate by 0.25 percentage points to 7%, according to the website of the regulator. This is the lowest level since 2014 and the third consecutive decrease in the key rate

Moscow-Live.ru / Akishin Vyacheslav

According to RBC, first Vice Prime Minister and Minister of Finance of Russia Anton Siluanov said that the slowdown in inflation gives the Central Bank reason to reduce the key rate

The press service of the Russian Government

The Central Bank of Russia took a decision to reduce the key rate by 0.25 percentage points to 7%, according to the website of the regulator. This is the lowest level since 2014 and the third consecutive decrease in the key rate, reports channel «Rain».

In comments to the decision of the Bank of Russia noted the continued deceleration of inflation in the Russian Federation. However, the regulator pointed out that inflation expectations remain at an elevated level. «The pace of growth of the Russian economy continues to develop below the expectations of the Bank of Russia. Increased risks of significant deceleration of the world economy. Until the end of the year the risks of acceleration and deceleration of inflation balanced,» added the Central Bank.

In addition, the regulator did not rule out further lowering the key rate. «With the development of the situation in the baseline forecast, the Bank of Russia will assess the feasibility of further reduction of the key rate on one of the next meetings of the Board of Directors. The Bank of Russia will make decisions on the key rate based on the actual and expected dynamics of inflation relative to the target, the development of the economy in the forecast horizon, as well as assessing the risks from the internal and external environment and the reaction of financial markets», — explained in the message of the Central Bank.

At the same time with a reduction rate of the Central Bank changed the inflation forecast for 2019 is from 4.2-4.7% to 4-4,5%. According to RBC, first Vice Prime Minister and Minister of Finance of Russia Anton Siluanov said that the slowdown in inflation gives the Central Bank reason to reduce the key rate.

The rate of growth of the Russian economy continues to develop below the expectations of the Bank of Russia, which also affects the reduction rate. This is due to the decrease in external demand for Russian exports in the situation of global economic slowdown and weak dynamics of investment activity, including in terms of government investment spending. As noted, in the first half of fiscal policy has had a constraining influence on the dynamics of economic activity. This is partly due to slower than expected implementation of the planned government of national projects.

Given the weak economic performance observed since the beginning of the current year, the Bank of Russia lowered the forecast of GDP growth in 2019, with 1.0 to 1.5 and 0.8 to 1.3%. In 2020-2021 years, the growth rate of the Russian economy also revised downward given the expected slowdown in the global economy, reports «Interfax».

The decision of the Bank of Russia to lower its key interest rate by 25 basis points had almost no effect on the dynamics of the ruble on the Moscow stock exchange, reports TASS. To the solution of a Central Bank rate of the dollar stood at 65,98 ruble and Euro — ruble 72,73. After the announcement of the Central Bank to lower the key rate dollar exchange rate as of 13:35 fell by 0.11% to 65,91 rubles, and the Euro — on 0,07%, to 72.68 RUB.

The last time the key rate to 7% the Central Bank was established in early March 2014, before the annexation of Crimea to Russia and the imposition of sanctions against Russia for aggression in Ukraine. In December of the same year this figure was 17%.

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