Bank of Russia Sees Room for More Rate Cuts This Year

The First Deputy Chairwoman of the Bank of Russia, Ksenia Yudayeva, said Friday that the regulator sees room for more basic rate cuts, sending a dovish signal three weeks before the bank’s next rate-setting meeting, Reuters reports. 

The Central Bank lowered the cost of borrowing for the third time this year in early September, cutting its key interest rate to 7%, and said another such move was possible at one of the next three board meetings.

“In principle, indeed, we will study and consider various effects each time (when making a decision) but we see a certain scope for lowering (the rate) further,” Yudayeva told budget hearings in parliament’s upper house.

The cuts have taken place against a backdrop of slowing inflation and sluggish economic growth, which also prompted the Central Bank to lower its gross domestic product forecasts. Analysts took Yudayeva’s message as an indication that the Central Bank is ready to lower its main interest rate in the nearest future.

“The Central Bank is giving a clear signal about its readiness to lower the rate already at the upcoming board meeting,” said Kirill Tremasov, a former economy ministry official and now head of research at Loko-Invest. The next two rate-setting meetings are scheduled for Oct. 25 and Dec. 13.