Russia’s inflation rate keeps tumbling.
Consumer prices rose by 4.3% year-over-year in March, in line with expectations, and below the prior month’s reading of 4.6%.
This is the lowest rate since June 2012.
In month-over-month terms, inflation rose by just 0.1%, shy of the 0.2% forecast.
“All in all, today’s data support our view that headline inflation is on course to reach the central bank’s 4% target shortly,” William Jackson, senior emerging markets economist at Capital Economics, wrote in a note. “We expect this to happen within the next few months, with the headline rate likely to dip below the target in the second half of the year.”
“Against this backdrop, the central bank should be comfortable with continuing the easing cycle,” he added.
At its March meeting, the Central Bank of Russia lowered its one-week repo rate by 25 basis points to 9.75% from 10.00%.
During the press conference after the decision announcement, central bank governor Elvira Nabiullina suggested that Friday’s cut was not a one-off, but that further monetary easing will be gradual.
Moreover, in the accompanying policy statement, the bank wrote that the inflation slowdown is “overshooting” its forecast and that economic activity continues to recover. “While assessing evolving inflation dynamics and economic developments against the forecast, the Bank of Russia admits the possibility of cutting the key rate gradually in coming Q2-Q3,” it added.
The Russian ruble is little changed at 56.0371 per dollar as of 10:01 a.m. ET.
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