The Central Bank dropped the key rate to new low

the Board of Directors of the Central Bank of the Russian Federation following the meeting on Friday lowered the value of the key rate from 100 basis points (1 percentage point) to 4.5% per annum, the press service of the Bank of Russia.

Thus, the rate is lowered the third time this year and to a new historic low. Today the regulator’s decision coincided with forecasts of some analysts.

the Key rate of the Bank of Russia — the main tool of monetary policy of the regulator. The rate at which the Central Bank provides money to commercial banks. She serves as a signal of financial organizations, which focus on key rate, by providing loans and attracting deposits.

As stated the Central Bank in its press release that “the disinflationary factors are stronger than previously expected, due to the greater duration of restrictive measures in Russia and in the world.” “The impact of short-term proinflationary factors largely exhausted. Financial stability risks related to the situation in global financial markets decreased. Inflation expectations of population and business has decreased. In these circumstances there is a risk of significant deviation in inflation from 4% in 2021. The decision on the key rate is aimed at limiting this risk and keep inflation near 4%,” — said the controller.

“With the development of the situation in the baseline forecast, the Bank of Russia will assess the feasibility of further lowering the key rate at the next meeting”, — stated in the message.

the Next meeting of the Board of Directors of the Central Bank, which will address the issue of the level of the key rate, scheduled for July 24, 2020.

Recall that the Russian economy in February—March 2020 was under the powerful impact of two negative factors — the rapid spread of the pandemic coronavirus infection COVID-19 and its deleterious effect on globvery high economy and collapse in oil prices. Against this background, the rouble significantly depreciated against the dollar and the Euro. Reacting to the situation, the government and the Bank of Russia adopted several packages of measures to support the economy and citizens.

may 11, Russian President Vladimir Putin announced the end of may 12, a single period of days off, entered March 30, in the fight against COVID-19. He also announced the beginning of implementation of the third package of anti-crisis measures, under which the state, in particular, will increase targeted support for families with children, small businesses, individual entrepreneurs and self-employed. In addition, Putin instructed the government to prepare a national plan for long-term development of the economy, the recovery in employment and incomes.

on 27 may, the Minister of economic development (MED) of the Russian Federation Maxim Reshetnikov said that the total cost of anti-crisis measures to support the Russian economy, aimed at combating the impact of the pandemic coronavirus has reached 3.3 trillion rubles.

on 2 June Prime Minister Mikhail Mishustin presented to the President a national plan for the recovery of the Russian economy in 2020-2021 years, noting in particular that the cost of the plan will be about 5 trillion rubles.

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