In the relatively short term, there is reason for further rate cuts by the Bank of Russia, Prime Minister Dmitry Medvedev in an interview with “the First channel”.
“At the moment we can say that the price growth slowed down, inflation was lower, and this gives grounds to assume that in the relatively short run it is possible to speak about decrease in key Bank rates, including key rate of the Central Bank,” Medvedev said (quoted by “RIA Novosti”).
He stressed that the Central Bank is free to decide these issues,” but noted that, nevertheless, if the present trend it is obvious that the key rate will be reduced. “In this case, we will be quite reasonable, I’d say modern, civilized rate mortgages,” he added.
On 16 September the Board of Directors of the Central Bank lowered its key interest rate from 10.5% to 10% per annum. The decision was taken considering “the slowing of inflation in accordance with the forecast and reduce inflation expectations while preserving the fragile economic activity.”
The regulator noted that the rate decrease to 10% is sufficient to create the necessary conditions for the further reduction of inflation. Therefore, stated in the release of the Bank of Russia, further reduction of the key rate may occur in the first half of 2017.
On September 23 the head of the Central Bank Elvira Nabiullina said that the regulator may lower the rate faster than promised, if the price of oil will be higher or if the economy will feel better than expected in the baseline scenario of the Central Bank. “However, we believe that there is a high probability that such events may happen,” she said.
The Chairman of the Central Bank Dmitry Tulin 28 September reported that the Bank of Russia seeks to avoid unnecessarily frequent changes in the key rate. “Our goal is inertia in the dynamics stakes. That is not to hurry with its decline as good news and not to rush to her advancement when you receive bad news,” said Tulin.