Bank Of Russia Surprises With Unexpected Rate Cut, Brings YTD Total Of Nations Easing To 14
Yesterday we reported that in less than 1 month in 2015, so far a whopping 13 countries have proceeded with “surprising” rate cuts: Singapore, Europe, Switzerland, Denmark, Canada, India, Turkey, Egypt, Romania, Peru, Albania, Uzbekistan and Pakistan. As of this morning, make that total 14, because in one of the more “surprising surprises” so far, it was none other than the Bank of Russia which cut its main interest rate from the 17% shocker it instituted at an emergency session on December 17 to halt the Ruble collapse (as a result of the crude price plunge) to 15% less than an hour ago. At the same time it cut the deposit rate to 14% and the repo rate to 16%.
More rate cuts may be coming:
- NABIULLINA SAYS 15% RUSSIA’S KEY RATE STILL FAIRLY HIGH
Not surprisingly, the ruble tumbled in response with the USDRB jumping to 72, while the RTS stock index was down 2% at last check.
The question why Russia decided to cut rates now is relevant, and likely has to do with both the recent stabilization of crude prices in the mid-$40s, coupled with pressure from the administration to lower rates which have led to the Russian economy and banking sector grinding to a near halt.
More from the WSJ:
This was the first rate-setting meeting with Dmitry Tulin, a former deputy chairman who replaced Ksenia Yudaeva as monetary-policy chief earlier this month.The statement issued after the central bank’s board meeting was the latest acknowledgment by Russia’s leadership that its economy will face protracted pain amid falling oil prices and a confrontation with the West over Ukraine.
And Bloomberg’s take:
…click on the above link to read the rest of the article…
