Russia's Monetary Policy in 2016
Russian Economy In 2016: Trends and Outlooks. 2017. Moscow, IEP, Issue 38, pp. 27-45
21 Pages Posted: 17 Jul 2017
Date Written: July 7, 2017
In 2016, the Bank of Russia implemented a conservative monetary policy aimed at mitigating inflation. Commercial banks decreased their demand for central bank refinancing as the Reserve Fund was spent, in which case the central bank had to employ a set of instruments to prevent an increase in the money supply. It happened twice over the course of the year – on June 14 and September 19 – that Russia’s central bank cut 0.5 percentage points off the key rate, to 10% p.a. With a declining inflation rate and inflation expectations available during the year, a rather moderate decline in the key rate suggested growth of the real interest rate in the money market. Maintaining a positive real rate in the money market helps prevent prices from hiking upwards as the savings appeal strengthened, although there is risk of economic slowdown.
Keywords: Russian economy, monetary policy, money market, exchange rate, inflation, balance of payments
JEL Classification: E31, E43, E44, E51, E52, E58
Suggested Citation: Suggested Citation