The Bank of Russia raised the rate by 0.25% to 7.5%

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Today, the Bank of Russia, within expectations, raised its key interest rate by 0.25 b.p. to 7.5%. In fact, the rate hike by the fed leaves the Central banks of emerging markets of choice. While inflation quite soon may reach the Central Bank target of 4%. The regulator has increased the range of growth dynamics of inflation to 5-5,5% in 2019. CBR Likely, the market will decide that this is not the last increase and the Russian mega-regulator will continue to tighten monetary policy further. Today’s decision is already in prices, the impact on the ruble and the stock market will be neutral.
The news, of course, will please depositors of commercial banks, it is now possible to expect acceleration of growth of rates on deposits. While the Central Bank of the Russian Federation by its decision confirmed that an independent monetary authority, and not a conventional Ministry, which reports to the Prime Minister and the President. Dreamed about this legendary head of the CBR in the 90s, Viktor Gerashchenko and former Prime Minister Viktor Chernomyrdin.
The independence of the Central Bank of the Russian Federation – a key achievement of economic reforms in Russia. That is why persons with low neckline intellectual responsibility believe that the Bank of Russia submits to the fed. So in conclusion, critics of the decision of the Russian mega-regulator suggested that the decision in the long term will slow down business activity in Russia, which will eventually lead to the weakening of the ruble. And in their words definitely have some truth.
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Alexander Razuvayev,
The Director of analytical Department,
Alpari