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Bank of Russia lowers key rate to 5,5% per annum

Bank of Russia lowers key rate to 5,5% per annum

The central bank lowered its key rate by 50 bp. p. to 5,5%. The bank's board announced the revision of the base forecast scenario and the transition to soft monetary policy. With the development of the situation in accordance with the basic forecast, the regulator is ready to further reduce the key rate.

According to the press service Central Bank, when making a decision, the task of maintaining financial stability was taken into account. All further decisions will be made taking into account the actual and expected dynamics of inflation, the level of economic development, as well as taking into account risk assessments.

According to the forecast, taking into account the current monetary policy, annual inflation will be 3,8–4,8% according to the results of 2020 and will stabilize at around 4% in the future.

The regulator says the annual growth rate of consumer prices by 3,1%. Annual inflation increased from 2,3% in February to 2,5% in March. The inflation dynamics in March and April reflect the temporary reaction of consumer prices to the weakening ruble and increased demand for certain groups of goods.

The parameters of the base forecast scenario of the Central Bank are substantially revised. GDP will fall by 4–6% this year. In the future, the recovery growth of the Russian economy is forecasted at 2,8–4,8% in 2021 and 1,5–3,5% in 2022.

The next meeting, which will consider the issue of the key rate level, is scheduled for June 19, 2020.

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