Having reached peak in March, annual inflation decreased — to 16,4% in April and 15,8% in May. By estimates of Bank of Russia, as of June 8 annual rate of a gain of consumer prices made 15,6%. Thus week inflation in May — the beginning of June was stabilized at the level which isn’t exceeding 0,1%. Delay of growth of consumer prices was substantially caused by decrease in a consumer demand in the conditions of essential reduction of the real income, and also strengthening of ruble in February-May. Besides, process of fine tuning of the prices to the foreign trade restrictions introduced in August, 2014 came to the end and this factor didn’t put additional inflationary pressure.
Decrease of the inflation rate is also promoted by preservation of rather severe monetary and credit conditions. Growth rates of money supply (Sq.m) remain at a low level. Under the influence of the decisions on decrease in key interest rate which are earlier made by Bank of Russia the tendency of decrease in credit and deposit rates remains. However their level remains high that, on the one hand, promotes preservation of appeal of savings in rubles, with another — along with toughening of requirements to quality of borrowers and to providing leads to delay of growth of crediting in annual expression.
Dynamics of the main macroeconomic indicators indicates further cooling of economic activity. Though factors of structural character continue to have the constraining impact on economic growth, release reduction now including has cyclic character. Decrease in new orders, reduction of utilization of capacity and labor, and also some growth of unemployment testifies to it. By estimates of Bank of Russia, fine tuning of labor market to new conditions happens generally due to reduction of wages and growth of a part-time employment. Action of these factors along with delay of growth of retail crediting will lead to further reduction of consumer expenses. Investments into fixed capital will continue to decrease that will be caused by negative expectations of economic agents concerning prospects of the Russian economy and severe conditions of crediting. Also limited opportunities of replacement of external sources of financing internal owing to narrowness of the Russian financial market and high ruble debt loading will constrain an investment demand. At the same time some support to investments will be given by realization of the state anti-recessionary measures. Weak investment and consumer activity will cause low demand for import. Thus in the conditions of a floating exchange rate decrease in export will be less considerable. As a result pure export remains the only component making a positive contribution to growth rates of release. Reduction of GDP for 3,2% is expected following the results of 2015. Further the economic situation will depend on dynamics of energy costs, and also on ability of economy to adapt for the occurred external shocks. According to forecasts of Bank of Russia, in case of restoration of prices of oil to 70 US dollars for barrel by the end of 2016 rate of a gain of GDP will make 0,7% following the results of a year. However at preservation of price of oil at the level of about 60 US dollars for barrel during 2016 release will be reduced by 1,2% following the results of a year.
Weak domestic demand will promote continuation of decrease of the inflation rate in 2015-2017. The additional constraining impact on the prices in the next months will be had by the strengthening of ruble which took place in February-May. Delay of growth of consumer prices will create prerequisites to further decrease in inflationary expectations. According to the forecast of Bank of Russia, annual inflation in June, 2016 will make less than 7% and will reach the target level of 4% in 2017.
The main sources of inflationary risks are possible deterioration of the external economic environment, preservation of inflationary expectations at the increased level, revision of the rates of increase in regulated prices and tariffs planned for 2016-2017 and mitigation of the budgetary policy. The bank of Russia will be ready to continue decrease in key interest rate in process of weakening of inflationary risks and further delay of inflation according to the forecast, but thus the potential of mitigation of a monetary policy in the next months is limited to inflationary risks.
The following meeting of the Board of Directors of Bank of Russia at which the question of the level of key interest rate will be considered, is planned for July 31, 2015. Time of the publication of the press release about the decision of Board of directors of Bank of Russia — 13:30 Moscow time.

Interest rates for the main operations of Bank of Russia
(% per annum)

Appointment

Type of the tool

Tool

Term

from 05.05.15

from 16.06.15

Granting liquidity

Operations of continuous action (on the fixed interest rates)

Repo; credits “overnight”;
lombard loans;
the credits provided with gold; the credits provided with non-market assets or guarantees;
transactions “a currency swap” (ruble part)

1 day

13,50

12,50

Operations on an auction basis (the minimum interest rates)

Auctions on granting the credits provided non-marketable assets

3 months

12,75

11,75

Repo auctions

1-6 days, 1 week

12,50
(key rate)

11,50
(key rate)

Liquidity absorption

Operations on an auction basis (the maximum interest rates)

Deposit auctions

1-6 days, 1 week

Operations of continuous action (on the fixed interest rates)

Deposit operations

1 day, on demand

11,50

10,50

For information:

Refinancing rate

8,25

8,25

1 Information on rates on all operations of Bank of Russia is provided in the table «Interest Rates for Operations of Bank of Russia».
2 The floating interest rate attached to the level of key interest rate of Bank of Russia.
3 Operations of “thin settings”.
Information “About an order of carrying out operations of “thin settings””
Information “About operations of “thin settings” on liquidity absorption”

Press service of Bank of Russia