Bank of Russia cuts key rate to record 5.5% per annum

The Bank of Russia lowered its key rate at once by 50 basis points to 5.5% per annum for the first time since October last year.

This was reported by TASS with reference to a statement by the regulator following a meeting of the board of directors.

“On April 24, 2020, the Board of Directors of the Bank of Russia decided to reduce the key rate by 50 bp up to 5.50% per annum. The situation has changed dramatically since the meeting of the board of directors in March. Significant restrictive measures have been introduced both in the world and in Russia to combat the coronavirus pandemic, which negatively affects economic activity, ”the Central Bank said in a statement.

According to the regulator, this creates a significant and lasting disinflationary effect on price trends from the side of aggregate demand, which compensates for the effects of temporary inflationary factors, including those associated with a fall in oil prices.

The Bank of Russia admits the possibility of further reduction of the key rate at the next meetings.

“If the situation develops in accordance with the basic forecast, the Bank of Russia admits the possibility of further reduction of the key rate at the next meetings. The Bank of Russia will make decisions at a key rate taking into account the actual and expected inflation trend relative to the target, the development of the economy on the forecast horizon, as well as assessing risks from internal and external conditions and the reaction of financial markets to them, ” the regulator informs. Thus, it is emphasized that the Central Bank is turning to the field of loose monetary policy.