BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/05
The CBR’s reference to the possibility of tightening monetary policy slightly surprised the markets. In December, the central bank signalled that it would begin gradual lowering of rates if inflation moderated in line with its forecast. The latest CBR announcement pointed to the possibility of monetary tightening in coming months if inflation risks further amplify. It further noted that the oil price is likely to be lower than in its December baseline forecast of $50 a barrel in 2016–2017, so Russia’s GDP development is expected to be even weaker than earlier predicted. In December, the central bank forecasted that GDP would still contract 0.5-1 % this year and return to modest growth in 2017. The CBR board’s next meeting on interest rates is set for March 18, 2016.