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The Bank of Russia Switches Over to Monetary Policy Easing

Alexandra V. Bozhechkova – Head of Monetary Policy Department of the Gaidar Institute; Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Pavel V. Trunin – Head of Center for Macroeconomics and Finance of the Gaidar Institute; Leading Researcher of the Russian Presidential Academy of National Economy and Public Administration, Doctor of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

At its June meeting, for the first time this year, the Bank of Russia Board of Directors decided to cut the key rate by 0.25 pp. to 7.5% per annum. Such a decision was motivated by the plunge of annual inflation in April-May 2019 to 5.1%, coupled with weakening inflation risks. The inflation forecast for 2019 has been revised, the target being reduced from 4.7–5.2% to 4.2–4.7%. The RF Central Bank expects that the annual inflation rate in 2020 will hover around 4%, and so it plans to roundup its transition to neutral monetary policy by the middle of the next year.

Key words: inflation, basic inflation, annual inflation, prices, consumer prices, monetary policy, key interest rate, target.