Russia keeps key policy rate unchangedStaff Writer | October 29, 2016
Russia's central bank held its key policy rate unchanged, following a reduction in September, as policymakers assessed that inflation slowdown was not yet sustainable.
Russian economy Gross domestic product is set to fall
Policymakers judged that the dynamics of inflation and economic activity were overall in line with the forecast and inflation is slowing down largely due to temporary factors. The deceleration in inflation expectations remains unsteady, the bank pointed out.
"For the trend towards inflation slowdown to become sustainable, according to Bank of Russia estimates, it is necessary to hold the current key rate throughout 2016, with its potential downgrades due in 2017 Q1-Q2," the bank said.
"Given this decision and considering that the moderately tight monetary policy is maintained, annual growth in consumer prices is set to total less than 4.5 percent for October 2017, dropping to the target level of 4 percent by the end of 2017."
Policymakers will assess inflation risks alongside with the alignment of inflation dynamics and economic performance with the baseline forecast, while deciding on interest rates in future.
Gross domestic product is set to fall 0.5-0.7 percent this year, while the fourth quarter is expected to post a slight quarterly growth, the central bank said. In 2017, economic growth is expected to be below 1 percent. ■