New rate cut by the Russian Central Bank, which lowers the cost of money by 150 basis points, from 9.5 to 8%.
“The current growth rate of consumer prices remains low, contributing to a further slowdown in annual inflation”, which fell to 15.9% in June, after 17.1% in May, and, according to estimates, at 15 July down further to 15.5%.
The slowdown was “supported by the dynamics of the ruble exchange rate and by an overall modest consumer demand”, as well as by “a further significant reduction in the inflation expectations of households and businesses, returning to the levels of spring 2021”.
On the macro front, the external conditions for the Russian economy remain “challenging and significantly limit economic activity” even if “currently operational indicators show that the decline in economic activity is slower than” expected in June. In its baseline scenario, the Bank of Russia expects GDP to decline by 4-6% in 2022, followed by a reduction of between 4 and 1% in 2023 and growth of 1.5-2.5%. in 2024. As for inflation, the expectation is for an increase between 12 and 15% in 2022, between 5 and 7% in 2023 and 4% in 2024.
The rate cut causes the ruble to slide, losing ground on all currencies and dropping 2.5% against the dollar.
Source: Ansa
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