Russian central bank holds key interest rate at 11%

By bne IntelliNews March 18, 2016

The Central Bank of Russia (CBR) at its March 18 board meeting kept the key interest unchanged at 11%, extending the pause in monetary easing and slightly moderating its hawkish stance on inflationary risks.

Despite a continuous disinflation trend and surprising inflation reports in February, rising oil prices, and a recovering ruble, the CBR had not been expected to cut the rate, limited by the hawkish stance taken previously in January.

18 out of 22 analysts surveyed by Reuters expected the rate to stay unchanged, with some analysts betting on a surprise 50bp rate cut. The CBR was broadly expected to soften its rhetoric and allow for a continuation of its monetary easing that was interrupted by the drop in oil prices in 2015.

However, the phrasing of the CBR press release also did not point to a possible cut in the key interest rate at the next meeting if inflationary pressures ease as expected. Instead, the regulator named oil price and fiscal risks, as well as uncertainty about the inflationary effect of the weaker ruble in the beginning of 2016 as main points of concern.

Despite acknowledging the drop inflation and recent rise in oil prices and ruble, the CBR noted that it will continue to pursue a "moderately tight monetary policy for a more prolonged time than previously planned".

Sberbank CIB commented on March 18 that the "press release displayed a more hawkish position than we had anticipated".

The investment arm of Russia's largest lender attributes this to the influence of the CBR's revised medium-term forecasts which are yet to released but are expected to be downgraded from the December version.

"The CBR clearly stated that it still sees risks to inflation coming from the fiscal side (including regulated tariff hikes, public wage and pension indexation), oil and food price trend reversals and stubbornly high inflation expectations," Sberbank CIB noted.

Lower inflation and possible ruble stability are not expected to affect the CBR's decision at its next meeting on April 29, although the regulator will continue to gradually soften its stance, the analysts wrote.

Related Articles

London High Court throws out Ukraine’s bond case against Russia

The High Court in London on March 29 ruled that it would not be right for a $3bn Eurobond case brought by Russia against Ukraine to go to full trial since Kyiv has no “justifiable defence” for ... more

EU court upholds sanctions against Russia’s Rosneft

The European General Court (EGC) in Luxembourg after a year of hearings deemed the sanctions against Russian state-controlled oil company Rosneft as legal, which the company protested as “illegal, ... more

Russia's Sberbank selling its Ukrainian subsidiary

Russia’s largest bank Sberbank is selling its subsidiary in Ukraine to a consortium of investors that includes Latvia’s Norvik Bank and a private Belarusian company, Sberbank said in a statement ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss