Central Bank of Russia Holds Refi Rate at 8.00%

The Central Bank of Russia kept its benchmark refinancing rate steady at 8.00%.  The Bank said: "The dynamics of the main macroeconomic indicators in January showed that the rates of growth in consumption were still higher than in production. Real wage growth rate remained high, partly due to its dynamics in the public sector of economy, while the rate of unemployment remained rather low. The consumer credit activity also stays robust. At the same time production growth rates remained moderate and economic confidence indicators kept rather weak in the recent months. Considering recent domestic and international macroeconomic developments the Bank of Russia judged that the current level of money market interest rates within the interest rate corridor was appropriate in the coming months."

The Russian central bank previously cut the refi rate 25bps at its December meeting, while it last raised the fixed overnight deposit rate by 25bps to 3.50% in May, and the benchmark refinancing rate by 25 basis points to 8.25% in April this year.  Russia reported annual inflation of 4.1% in January, down from 6.8% in November, 7.2% in September and October, down from 8.2% in August, 9% in July, and 9.4% in June, meanwhile Bank Chairman Sergey Ignatiev is trying to keep inflation between 6% and 7%. 

Russian economic growth was recorded at 5.2% y/y in Q3 this year, compared to 3.4% in Q2, 4.1% in Q1, and 4.5% in the December quarter of 2010; the IMF is expecting 4.5% growth for the full year.  The Russian Ruble (RUB) has weakened about 4% against the US dollar over the past year, while the USDRUB exchange rate last traded around 29.41.  The Bank plans to meet again in early April.

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