Central Bank of Russia may cut interest rate by 25 bps in February

The Central Bank of Russia’s head of monetary policy department, Igor Dmitriev, stated that the Russian central bank is considering lowering rates by additional 25 basis points during its next policy meeting in February, noted Commerzbank in a recent report.

Dmitriev noted that the option of a 50 basis point cut exists too; however, he downplayed this scenario by saying that room for aggressive cuts has now reduced. Looking at the latest weekly data, inflation has slowed further to 2.3 percent from December’s 2.5 percent. However, Dmitriev anticipates inflation to re-accelerate to the 4 percent target by the end of this year.

In the meantime, his comments show that senior policymakers are in favor of continuing with monetary easing: that makes a 25 basis point rate cut a distinct possibility, stated Commerzbank.

“Our base-case is for the next 25bp to come in March -- a month earlier is not really inconsistent with our view”, added Commerzbank.

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