Higher-than-expected interest rate cut from Russia

The Central Bank of Russia cut the policy rate by 300 basis points from 17 percent to 14 percent. The median expectation of economists surveyed by Bloomberg was for a 200 basis point cut.

The bank shared its prediction that the Russian economy will contract by 8-10 percent this year.

Inflation in Russia, which occupied Ukraine, rose to 16.7% in March. In its statement today, the bank included its forecast that annual inflation will be in the range of 18-23 percent this year.

The external environment continues to be challenging for the Russian economy, and this is hurting economic activity. As there was no increase in prices and risks to financial stability, the necessary conditions for a reduction in the policy rate were created. It was also emphasized that the need for structural transformation in the economy would be taken into account and that inflation targets would be returned in 2024.

The Central Bank of Russia increased the policy rate from 9.5 percent to 20 percent with an increase of 1050 basis points in February due to the sharp fall in the ruble after the start of the war, and decreased it to 17 percent in April.