Monetary Policy and Inflation in July 2022

Following a meeting on July 22, the Bank of Russia cut the key rate by 150 b.p. at a time to 8% per annum, while most analysts expected the rate reduction by 50 b.p. The decision was motivated by the slowdown in current inflation, lower inflation expectations of households and businesses, as well as weak consumer demand. The Bank of Russia has strengthened the signal on the further dynamics of the key rate compared to the last press-release, however it is still rather soft, which indicates a continuation of the monetary cycle easing in H2 2022. The updated range of the average key rate value for 2022 allows for its reduction to 6.5% by the end of the year