Russia cut rates.
The Central Bank of Russia lowered its one-week repo rate by 25 basis points to 9.00%. Most economists were expecting a 50 basis point cut.
In the accompanying statement, the bank said it sees room for further rate cuts in the second half of the year.
The bank also emphasised that mid-term risks to inflation “remain elevated,” and noted that oil prices “began to take shape at a lower level than expected” after the agreement by OPEC and non-OPEC producers to cut output.
“Today’s statement marked quite a change in tone from the previous Council meeting,” said William Jackson, senior emerging markets economist at Capital Economist, who added the bank’s statement adopted a more cautious tone than most were expecting.
“This can probably be pinned on a few factors, including that inflation was a bit higher than expected in May and that oil prices have declined since the last Council meeting,” he said.
“The threat of tighter US sanctions may also have raised concerns about ruble weakness and higher inflation,” Jackson continued. “Market-based measures of expectations for interest rates and inflation in Russia have edged up a little since the US Senate approved a bill this week to tighten sanctions.”
The ruble was stronger by 0.6% at 57.4689 per dollar at 7:48 a.m. ET.
This post will be updated after the Central Bank of Russia Governor Elvira Nabiullina’s press conference concludes.