Russian Federation Interest Rate

The Central Bank of Russia cut its key interest rate by 150bps to 9.5% during its June 2022 meeting, bringing borrowing costs back to levels prior to the Ukraine invasion, and compared to market forecasts of a 100bps drop. It follows a 300bps cut during an extraordinary meeting two weeks earlier and the central bank said it will consider the need of further loosening in the next meetings as inflation is slowing faster and the decline in economic activity is of a smaller magnitude than initially expected in April. At the same time, the ruble remains strong, holding close to levels not seen in seven years. Annual inflation is now seen at 14%–17% in 2022, and is expected to decline to 5%-7% in 2023 and return to 4% in 2024. The key rate is expected to average 10.8%-11.4% in 2022, 7%–9% in 2023 and 6%–7% in 2024.