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Russia's Central Bank keeps key rate unchanged

3 February 2017 17:37 (UTC+04:00)
Russia's Central Bank keeps key rate unchanged

By Kamila Aliyeva

The Board of Central Bank of Russia decided to keep its key rate at a level of 10 percent per annum, the Central Bank reported on Friday.

The Central Bank’s Board of Directors points out that the dynamics of inflation is generally consistent with the forecast, inflation expectations are gradually declining and the economy is recovering faster than it was expected earlier.

At the same time, a descending growth rate of consumer prices is partially caused by the influence of temporary factors.

According to the estimates as of 30 January, annual consumer price growth was down from 5.4 percent in 2016 to 5.1 percent.

Growth in industrial production, partly driven by import substitution, is ongoing, so is the expansion of non-oil and gas exports in several categories.

If Russia's Central Bank maintains the moderately tight monetary policy, the planned operations by the Ministry of Finance of Russia on the purchase and sale of foreign currency in the foreign exchange market within the framework of the application of the transitional fiscal rules will not create significant inflationary risks.

According to the Central Bank, inflation will slow down to the target level of four percent by the end of 2017 and will be held close to its level in the future. Taking into account the changes in the external and internal conditions, the potential reduction of the key rate in the first half of 2017 has decreased.

Taking into account the changes in the external and internal conditions, the potential reduction of the key rate by Central Bank in the first half of 2017 has decreased.

Annual GDP is expected to show positive growth in 2017, however, the rates of economic growth will be low.

The next meeting of the Board of Directors of the Bank of Russia to review the key rate is scheduled for 24 March 2017.

Interest Rate in Russia averaged 7.21 percent from 2003 until 2017, reaching an all-time high of 17 percent in 2014 and a record low of 5 percent in 2010.

The last time the Central Bank of Russia changed the interest rate was in September 2016. Then, the key rate was reduced from 10.5 to 10 percent.

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