The Central Bank of Russia could soon cut interest rates once more to cope with the hardships of the COVID-19 crisis and the inflation risks, according to a market poll reported by Reuters.<\/p>\n\n\n\n
The move would strengthen the Russian Rouble (RUB) as Moscow aims at restoring economic recovery next year after being hit by the pandemic coupled with a drop in crude oil prices.<\/p>\n\n\n\n
Accordingly, this month could see the Russian central bank lowering its main rate to 4% from a current 4.25%.<\/p>\n\n\n\n
Further cuts remain unlikely, with the majority of market experts expecting rates to remain at 4% during 2021.<\/p>\n\n\n\n
It is worth noting that Russian monetary policymakers may opt to maintain the current rate despite the aforementioned factors.<\/p>\n\n\n\n
The Russian gross domestic product (GDP) declined by 4.2% in the first half (H1) of 2020, according to Russia\u2019s Minister of Economy, Maxim Reshetnikov.<\/p>\n\n\n\n
The ministry reportedly expects the economy to retreat by 4.8% in 2020 and expects the recovery to the pre-COVID-19 levels to take place by the fourth quarter (Q4) of 2021.<\/p>\n\n\n\n
During the second quarter (Q2) of 2020, the Russian economy contracted by 8.5% on an annual basis.<\/p>\n\n\n\n
The economic downturn came amid the coronavirus (COVID-19) outbreak, with lockdowns and preventive measures casting their shadows economic activities.<\/p>\n\n\n\n
Next year, Russia\u2019s gross domestic product (GDP) is expected to decline by 4.5% to 5.5%, with the economic recovery set to take place in 2022.<\/p>\n\n\n\n
Meanwhile, the inflation rate is expected to reach 3.7% by the end of the year.<\/p>\n\n\n\n
The Russian Central Bank cut its key interest rate to a record low of 4.25% in July and stated that it would consider the need for further monetary easing amid low inflation and a shrinking economy.<\/p>\n\n\n\n
The cut was in line with market polls, with expectations to cut the cost of lending for the fourth time this year to combat the economic effects of the COVID-19 pandemic.<\/p>\n\n\n\n
The bank revised its economic forecast and expected GDP to contract by 4.5% to 5.5% in 2020, before returning to growth in 2021.<\/p>\n\n\n\n
The Central Bank of Russia previously expected the local GDP to contract by 4% to 6%, while the inflation target remains at 4%.<\/p>\n","protected":false},"excerpt":{"rendered":"
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