Russia C.bank keeps interest rate unchanged

Russia C.bank keeps interest rate unchanged

Mubasher: Russia’s central bank left the key policy rate at its current level after raising it last December, as a rally in the rouble (RUB) and weak consumer demand restrained a surge in inflation.

The one-week auction rate was held at 7.75%, according to a statement on Friday.

The decision came after the Russian central bank's unexpected interest rate hikes at the end of last year for the first time since 2014.

The central bank “will decide on the key rate, taking account of whether the rate increases in September and December 2018 are enough for annual inflation to return to the target in 2020,” the statement said, adding that “the balance of risks remains skewed toward pro-inflationary risks, especially over a short-term horizon.”

It is worth noting that headline inflation jumped to 5% year-on-year last January, compared with 4.3% in the prior month, whereas core inflation saw a surprising decline as weak consumer demand kept a lid on price surges.

The central bank maintained its forecast that annual inflation will hit a peak in the first high of this year, and retreat to as low as 5% by the end of the year, hitting 4% in 2020.