The Central Bank decided not to raise the main rate

The Bank of Russia on Friday, March 22, left the key rate at 7.75%. The regulator raised it to this level in December 2018.

The Central Bank has significantly improved its assessment of the state of the Russian economy. He lowered his annual inflation forecast at the end of the year from 5.0-5.5% to 4.7-5.2% and predicts its return to 4% in the first half of 2020 (instead of the second half of the year).

“If the situation develops in accordance with the baseline forecast, the Bank of Russia allows a transition to a reduction in the key rate in 2019,” the Central Bank wrote.

All experts were waiting for such a decision. The main intrigue was precisely the tone of the Central Bank's rhetoric and the prospects for a rate cut, especially since the regulator had reasons to think about easing policy.

• Normal external conditions are an increase in oil prices (by 12% since the December meeting of the Central Bank), a strengthened ruble, the absence of new sanctions, and an easing of the policy of the US Federal Reserve.
• A successful start to the year in the Russian economy is the limited impact of the VAT increase to 20%, moderate inflation growth (at the peak in April it should not exceed 6%), lower inflationary expectations of the population.

In a February commentary, the Central Bank expected inflation to peak in the first half of the year and reach 5.0-5.5% at the end of 2019.