Central Bank lowered key rate at once by one percentage point

The Bank of Russia lowered its key rate at once by one percentage point - from 5.5% to 4.5%. The regulator explained this by the fact that disinflationary factors in Russia are stronger than expected due to the longer duration of the restrictions; the influence of pro-inflationary factors (including the March weakening of the ruble) has been largely exhausted. Therefore, the risks of lowering inflation below the 4% target in 2021 have grown substantially. The decrease in GDP in the second quarter is expected to be within 4-6%, taking into account the effect of anti-crisis measures. Recovery should occur in 2021-2022.

The next meeting at a key rate will be held on July 24, further reduction is not ruled out.

The last time the Central Bank immediately reduced the rate by one percentage point was in 2015 - from 17%.

The rate of 4.5% is the minimum for the inflation targeting regime applied since 2014.