The rouble has risen some 25% since January as the price of oil has almost doubled after hitting its lowest point in over a decade.
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More British people think the Bank of England will raise interest rates over the next year than three months ago as they see inflation picking up, a central bank survey showed on Friday.
Bank of Russian Federation lowered its main policy rate, the one-week auction rate, from 11.0% to 10.5%, a move which only half the analysts polled by Bloomberg had correctly anticipated.
“The Board of Directors notes the positive trends of more stable inflation, decreased inflation expectations and inflation risks against the backdrop of imminent growth recovery in the economy”.
Second. Positive trends in the economy are not accompanied by a higher inflationary pressure.
Even so, annual price growth remained at 7.3 per cent for a third month in May, the slowest since 2014.
Expected inflation in the twelve months after that was 2.2 percent compared with 2.1 percent in February.
The Bank of England has retained the interest rate at a record low 0.50 percent for seven years now.
Capital Economics said that decision had been a “close one” but now that the central bank had taken the plunge and restarted its easing cycle “interest rates will now fall further than the consensus is currently expecting”. Quarterly growth of GDP is expected at the latest of the second half of this year, it said.
“The risk that the bank will not meet its target of 4% inflation by the end of 2017 declined, but remain increased”, the bank named the fourth factor.
The rate cut and unusually bullish rhetoric from the central bank testify to the improvement in Russia’s economic prospects over recent months as commodity prices rally and geopolitical tensions ease.
Risks of Russia’s inflation deviation from the 4% target level in 2017 declined but remained high, the statement said.
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The head of the Regional Banking Association and chairman of the Duma Committee on Economic Policy, Innovation and Entrepreneurship Development, Anatoly Aksakov, speaking with a correspondent of Vestnik Kavkaza, noted a significant reduction in inflation since the last change in the key rate on August 3.
