News Column

Russia Keeps Key Rates On Hold

June 16, 2014

MOSCOW (Alliance News) - Russia's central bank left its key interest rate unchanged on Monday but warned that rates may be hiked if risks to inflation materialize.

The Board of Directors maintained the key rate at 7.50% per annum. The bank has raised the rate by a cumulative 200 basis points since February.

The escalation in the Ukraine crisis gives central bank little space for monetary policy easing. The bank estimates economic growth to ease to 0.4% this year as support from weak currency will be limited.

But the bank forecast economic growth to improve slightly in the second half of 2014 against the backdrop of alleviated geopolitical tension and improving producer sentiment.

Inflation rose to 7.6% in May, well above the target range of 5-6%.

"Maintaining current monetary policy stance will ensure a slowdown in consumer price inflation to the target levels in the medium term," the bank said in a statement.

"Taking into account that monetary policy influence on the economy is distributed over time, inflation slowing to the 5.0% target in 2014 is unlikely."

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Source: Alliance News

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