The National Bank in a small step again reduces the refinancing rate

The Board of the National Bank decided to reduce the refinancing rate from 11.5% to 11% per annum from October 18, 2017, the press service of the National Bank reported. This is already the eighth rate cut this year, the first six cuts were in increments of 1 p.p.

“Inflationary processes continue to slow down. In August 2017, in annual terms, the increase in consumer prices decreased to 5.3 percent. The main contribution to the slowdown in the annual growth rate of consumer prices is made by goods that are not subject to seasonal influence and administrative regulation,” the regulator states.

The share of goods in the consumer basket, the prices of which increased by less than 5% in annual terms, increased in August 2017 to 63% (about 30% a year earlier).

Taking into account the actual dynamics of inflation, it is expected that the increase in consumer prices in 2017 will be lower than previously predicted - closer to 6%, the report says.

“There are still no significant risks of increasing inflationary pressure from the balance of payments in the medium term,” the regulator notes. The growth rate of the money supply remains at a moderate level (an increase in the average broad money supply in August 2017 amounted to 9% in annual terms).

“The persistence of certain inflationary risks is associated with a relatively high level of inflationary expectations in the economy, as well as with an increase in the share of the active component in the structure of the ruble money supply,” the report says.

Further decisions on changing interest rates will be made by the National Bank, taking into account the likelihood and magnitude of inflationary risks that hinder the achievement of the medium-term inflation target (no more than 5% in 2020).