Russia’s central bank CRB surprised the markets by cutting its key benchmark rates by three times what was estimated.
The rates were cut by 150 basis points, in a historical phase of the country characterized by the arrival of a heavy recession, due to the sanctions that were imposed on Vladimir Putin’s Russia by the international community, after the invasion of Ukraine. by the Kremlin.
The rate cut was decidedly higher than expected by the consensus, which had envisaged a limited reduction of -50 basis points.
Rates thus fell from 9.5% to 8%.
“The external environment for Russia’s economy remains challenging and continues to significantly limit economic activity,” reads the central bank statement.
The one just announced is the fifth rate cut by the institution, after the massive emergency hike, from 9.5% to 20%, launched just after the invasion of Ukraine on 24 February last.
In June, the central bank cut rates by 150 basis points to 9.5%, thus bringing the cost of borrowing back to where it was at the start of the war.
The inflation rate, due to the economic slowdown, fell to 15.9% in June, compared to 17.1% in May.
The central bank CRB, led by Elvira Nabiullina, said that, in the second half of 2022, it will consider the need to initiate a further reduction in rates, in a context in which inflation is falling between 12% and 15%. % during the year, to then capitulate further to a range between 5% and 7% and return to the target of 4% in 2024.