Bank of Russia reduces key rate to 16%

The Bank of Russia slashed the key rate by 50 basis points to 16% per annum for the fifth time in a row amid the decline in current price growth rates but highlighted increased inflation expectations.

"The Bank of Russia Board of Directors decided to cut the key rate by 50 basis points to 16.00% per annum," the statement reads.

According to the regulator, the economy continues to return to a balanced growth path.

"Underlying measures of current price growth declined in November. However, inflation expectations have edged up in recent months. Lending activity remains high," the press release reads.

The Bank of Russia noted it will continue keeping such tightness of monetary conditions that is needed for inflation to return to the target.

"This means that monetary policy will remain tight for a long period. Further decisions on the key rate will be made depending on the sustainability of the inflation slowdown and the dynamics of inflation expectations," the regulator says.

The rate was cut by 50 bps at the last meeting as well, on October 24, to 16.5% per annum. It was lowered 100 bps at the meeting prior to that on September 12, and 200 bps to 18% on July 25. The regulator cut the rate for the first time in 2.5 years on June 6, by 100 basis points, from 21%.