Bank of Russia Lowers Key Rate in Surprise Move

The Bank of Russia unexpectedly cut the key interest rate by 25 basis points, marking the first such cut since September 2013. This decision was driven by a slowdown in inflation, declining inflation expectations, and recovering economic activity. Despite the cut, policymakers remain cautious due to ongoing inflation risks. The market's reaction was muted, with the ruble strengthening and Russian assets remaining popular. The rate cut did not significantly alter market sentiment, as it was considered too small to impact the overall narrative.

What were the main reasons the Bank of Russia decided to cut the rate?

• Rising inflation and economic slowdown

• Inflation slowdown, declining expectations, and economic recovery

• Increased foreign investment and currency stability

• High unemployment and fiscal deficit

Why was the 25 basis point cut significant?

• It was aimed at boosting exports

• It was the largest cut in history

• It was the first cut since the rate was introduced in 2013

• It was a response to international pressure

What is the Bank of Russia's target inflation rate by the end of the year?

• 2%

• 3%

• 4%

• 5%

How did the market react to the rate cut?

• The ruble weakened significantly

• The market was highly volatile

• The market mood remained unchanged

• There was a massive sell-off of Russian assets

What was the performance of the ruble following the rate cut?

• It fluctuated without a clear trend

• It strengthened and was the best performer among emerging markets

• It weakened against the dollar

• It remained stable