Russian Central Bank Cuts Key Rate

The Russian Central Bank cut its key interest rate to a record low of 4.25% on Friday and stated that it would consider the need for further monetary easing amid low inflation and a shrinking economy.

 The 25bp cut was in line with the Reuters poll, with expectations to cut the cost of lending for the fourth time this year to combat the economic effects of Covid-19.

“If the situation develops in line with the baseline forecast, the Bank of Russia will consider the necessity of further key rate reduction at its upcoming meetings,” the central bank said.

The bank revised its economic forecast and expected GDP to contract by -4.5-5.5% this year before returning to growth in 2021. The central bank had expected GDP to contract by 4-6% earlier.

Annual inflation at 3.3%, below the central bank’s target of 4%.