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 reasons cited by the Bank of Russia for cutting the rate?

What was significant about the 25 basis point cut mentioned in the text?

What are the inflation expectations mentioned in the text, and how do they relate to the central bank's target?

How did the recent rate cut affect the narrative around Russian assets?

What was the market's reaction to the rate cut, according to the text?