Inflation in Russia Close to Record Lows, Survey Shows

Annual inflation in Russia has eased to 2.2 percent in February, according to the median estimate of 20 economists surveyed by Bloomberg. Statistics show that price growth briefly fell to that level in 2018.

The Bank of Russia has cut its key rate in February by 25 basis points, from 6.25 percent to six percent. It left inflation outlook for 2020 unchanged, at 3.5-4 percent.

The Ministry of Economic Development and Trade expects inflation this year at three percent. Experts say that the possibility of inflation easing to a record low increases the likelihood of a seventh consecutive interest rate cut later this month. They also point to the global spread of coronavirus, which has sparked a sell-off in Russian assets.

“A 25 basis-point cut is now practically guaranteed in March and the likelihood of another reduction in the next few months has increased,” Alex Isakov, VTB Capital economist told Bloomberg.

The ruble slumped again on Friday as global oil prices dropped to a more-than two year low and Russia resisted pressure from its OPEC allies to make deeper production cuts.

According to analysts at Raiffaisenbank and Nordea Bank, a pause in easing this month is still possible, as the central bank is monitoring the consequences of the coronavirus outbreak.

“The virus isn’t under control yet and the risk of a sell-off in the market remains,” said Nordea analyst Tatiana Evdokimova.

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