Russia's central bank left out 4 essential words from its latest statement and no one knows what happens next
Reuters/Sergei Karpukhin
Last week, the Russian Central Bank maintained its rate-cutting agenda by slashing rates for the fifth time this year.
However, the bank altered its rhetoric this time around and the market isn't sure what happens next.
In its latest statement, the CBR took out the phrase "ready to continue cutting," signaling a potential shift in the central bank's strategy.
And according to what some analysts told Bloomberg, for the first time in months the central bank's next move isn't obvious.
"The central bank doesn't want to promise any clear steps," Dmitry Polevoy, chief Russia economist at ING Bank Eurasia in Moscow, told Bloomberg.
Notably, the bank's four-word omission follows last week's plunge in the ruble.
In that drop, Russia's currency erased nearly all of its 2015 gains, dropping below 60 to the US dollar for the first time since March.
"Policy makers are no longer committing themselves to lowering interest rates further," Liza Ermolenko, an analyst at Capital Economics, told Bloomberg. "Future interest rate decisions are likely to be determined by moves in the currency." Bloomberg
The bank has been cutting rates this year in response to the weaker economy, but some analysts previously suggested that a ruble plunge could inspire the bank to interrupt their rate-cutting agenda.
"On the one hand, the recession in the economy and extremely tight credit conditions argue for a rate cut," Ermolenko told Bloomberg. "But on the other hand, easing policy at the time when the ruble is weakening sharply could cause it to fall even further, creating risks for inflation and financial stability."
Currently, the ruble is trading near fresh lows of around 62.7 per dollar.
- I got a $40K raise using this 30-second strategy. It made me realize loud work, not hard work, always wins.
- Qatar Airways' new CEO explains why it's sticking with the Airbus A380 as other airlines retire the costly superjumbo
- Prince Harry and Meghan found out about Kate Middleton's cancer diagnosis on TV like everyone else, report says
- Fresh photographs of Milky Way’s black hole Sgr A* reveal strong, twisted magnetic field similar to M87*
- 8 Lesser-known places to explore in Himachal Pradesh
- Markets end FY24 on buoyant note amid positive global cues
- SRM Contractors IPO allotment – How to check allotment, GMP, listing date and more
- Rupee falls 6 paise to settle at 83.39 against US dollar