Russian Central Bank cuts benchmark borrowing cost again by 25bps to 6.25%
by SOURAV D | VIEW 458
On Friday, the 13th of December 2019, the Central Bank of Russia’s Board of Directors had reached a decision to slash its key lending rate again by 25 bps to 6.25 per cent from an earlier 6.50 per cent in a bid to revive the nation’s slowing economy, which had yet to join a string of major global economies drowning persistently into a sharp slowdown.
Aside from that, Friday’s (December 13th) decision of the Central Bank of Russia (CBR) came well in alignment with an analysts’ forecast who had also predicted a rate-cut of 25 basis point, while following release of Friday’s (December 13th) CBR move to downsize its benchmark lending cost further, a number of analysts were quoted saying that the nation’s inflation would likely to remain rangebound between 2.5 per cent to 3.5 per cent, while the world’s sixth-largest economy by PPP (purchasing power parity) and the eleventh-largest by nominal GDP was expected to grow by 2 per cent next year.
Besides, given the extent of inflation the Russian economy was experiencing, analysts were expecting another rate cut in a near-term outlook, but it seemed to be highly unlikely for CBR to lower key borrowing cost below 6 per cent since a strong Russian Rubble was expected to hammer down inflation rate below 4 per cent in an intermediate- to long-term outlook.
Meanwhile, forecasting further interest rate cut in the first half of 2020, an analyst from Freedom France, Yuri Kravchenko, said late on Friday (December 13th), “The regulator accompanied the decision to reduce rates by adjusting its key language.
If at the last meeting the Central Bank promised to evaluate the feasibility of further reducing the key rate ‘at one of the next meeting’, today it indicated the possibility of further reduction only in the ‘first half’ of 2020. ”