Bloomberg
Published Mar 20, 2020 06:53AM ET
Updated Mar 20, 2020 07:15AM ET
Russia Halts Easing as Ruble Takes Hit from Oil, Virus
(Bloomberg) -- The Bank of Russia bucked a global trend for interest-rate cuts amid the spread of coronavirus by keeping borrowing costs on hold amid a currency slump.
The benchmark interest rate was held at 6%, according to a statement Friday, following 175 basis points of easing in the past year. The decision was forecast by all but one of the 37 economists in a Bloomberg survey.
Future rates moves will take into account “actual and expected inflation dynamics” relative to the central bank’s 4% target and economic developments, according to the statement. “Risks posed by domestic and external conditions and the reaction of financial markets” will also be important.
Forward-action guidance was dropped from the central bank’s statement, but Governor Elvira Nabiullina is due to hold an off-schedule news conference at 3 p.m. Moscow time. The statement also refrained from giving forecasts on oil and economic growth.
Russia’s central bank is contending with the double shock of an oil price slump and the threat of a global recession as economies across the world shut down amid the pandemic. The bank warned that an economic downturn is possible in Russia in the coming quarters and inflation could temporarily exceed the target this year.
A more-than 20% plunge in the ruble in 2020 has prompted options markets to start predicting a shift to rate hikes in the coming months.
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Written By: Bloomberg
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