Raise or hold?
Russia has chosen the third option: cut.
The Central Bank of the Russian Federation cut rates today for the fourteenth time since December 2008, when the rate stood at 13 per cent. The newest 25bp cut leaves the refinancing rate at 7.75 per cent.
Russia may be taking its time to end its rate cuts, but it took its time to start them too: Russia actually raised rates by 1 per cent in November 2008, a month after the fall of Lehman Brothers.
Is this the end of interest rate slashing?
The central bank said in a statement (via Reuters)
The parameters set … create the conditions for the formation of money market rates which will enable an acceptable balance between the affordability of borrowing funds and inflation risks.
Consequently, the Bank of Russia thinks it likely that the achieved level of interest rates will be maintained in the coming months.