The Central Bank of Russia’s regular board meeting on December 16 decided to keep the key rate at 10 %, where it has remained since September. As of end-November, 12-month inflation had fallen to 5.8 %. The CBR estimated that inflation continued to decline slightly in the first two weeks of December and noted that its inflation and economic growth forecasts were on track. The CBR conceded that some of the slowing was due to transient events such as the record grain harvest. While the inflation risks have abated somewhat, inflation expectations remain elevated.
The CBR repeated its previous announcement that it was considering a rate cut in the first half of 2017 if inflation slowed as expected. CBR Governor Elvira Nabiullina said it was now more likely that the rate cut would come in the second, rather than the first, quarter. The CBR’s next regular board meeting is slated for February 3.