Russia's central bank refrained from a rate cut after easing for six consecutive meetings, amid the weakness in the currency and low oil prices after the spread of coronavirus, or covid-19.
The Board of Directors, led by Governor Elvira Nabiullina, decided to retain the key rate at 6.00 percent, the Bank of Russia said in a statement on Friday. The outcome of the meeting came in line with economists' expectations. The bank had reduced its rate by a quarter-point in February.
Although inflation is likely to temporarily exceed the target, it is expected to return to 4 percent in 2021, the bank said. Due to the changes in external conditions, inflation will rise in months ahead reflecting the weakness of the ruble in February and March.
Nonetheless, the bank assessed that the dynamics of domestic and external demand will exert a meaningful constraining influence on inflation on the back of a pronounced slowdown of global economic growth and increased uncertainty. The economic situation has been developing with a significant deviation from the central bank's forecast.
"The Russian economy's growth path will in many ways depend on the scale of the fallout from the further spread of the coronavirus and the action to counter it, alongside with the impact of this action on production, demand and business and consumer sentiment," the bank said.