The Bank of Russia left the interest rate unchanged at 7.5%

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The Bank of Russia took a decision to leave interest rates unchanged at 7.5%. The decision was widely expected, market reaction was not followed. Before the meeting, the representatives of the Central Bank publicly stated that the reason for no rate cut, but to increase too. Although the release follows that the regulator in the near future will stick to tight monetary policy, as proinflationary risks remain.
In our opinion, in the short term currency stability being threatened with sanctions and lower oil prices. Ahead of elections to the U.S. Congress and the debate of the bill on sanctions, together with the OPEC+ will decide the fate of deals for oil, in fact over the last two months of the year may see significant changes, expectations that are not in favor of the ruble, and thus inflation.
Inflationary expectations of the population and producers remain elevated against the background of lack of clarity. The growth rate of industrial production and GDP are not homogeneous, suggesting the instability of the economy. If the external situation will not develop in our favor, then at the next meeting of the CBR rate increase. If the prices of raw materials will be acceptable and serious sanctions will follow, even despite rising rates in the U.S., the regulator will leave it as is.
Today on the exchange for one dollar offer 65,7 RUB, EUR – RUB 74,5 Until the end of October ruble pair will be trading near these levels.
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Anna Kokoreva,
The Deputy Director of analytical Department,
Alpari