Monetary Policy and Inflation in June 2020

Abstract

Despite large scale external shocks seen in February-March 2020, there was no spike in inflation in Russia and at the period-end of June, the annual inflation rate came to merely 3.2%. After a short-term price surge, which was observed in MarchApril 2020, downward pressure on prices was exerted by a weak consumer demand, ruble’s appreciation, as well as decline in inflationary expectations of the population and businesses. In these circumstances the Bank of Russia cut its key rate to 4.5%, i.e. to all-time minimum.