Bank of Russia Surprises Markets

The Bank of Russia surprised market participants with its rate decision. The Russian financial regulator cut the interest rate to 9.75%. Though president Vladimir Putin expressed an opinion that there was no need to ease the monetary policy, the bank’s officials think that Russia’s economy is ready to withstand such changes. Experts say that the Russian economy is rEcovering at a solid pace. Policymakers of the Bank of Russia hope that the GDP growth rate will accelerate in the near term. The main argument in favour of the policy easing is the inflation rate in Ruussia. Consumer prices are growing at slower pace, and the inflation is expected to reach the target level of 4% in the nearest future. The inflation decelerated, as the Russian ruble has been rallying rapidly against the greenback for a long time.

As soon as the Bank of Russia announced its rate decision, the greenback took a nosedive, breaking a level of 57. Such a reaction was triggered by the news that the bank trimmed its interest rate by just 0.25% while analysts expect a deeper cut. Besides, the tax period has just started, so the US dollar is unlikely to gain ground in the nearest term. The next target for the USD/RUB pair is seen at the level of 56.60.

It is highly possible that the USD/RUB pair will end this week in negative terrirtory. However, the report on durable goods orders from the Unites States is expected later in the day, so the situation can change.

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