The IMF advises Russia to further cut interest rates in the coming months
The International Monetary Fund (IMF) advises Russia to further cut interest rates in the coming months in view of the weakening economy. “We assume that inflation will remain below the target values for some time and therefore recommend an easing of monetary policy in the coming months,” said the IMF in its country report after consultations with the Russian authorities.
Because of the corona pandemic, gross domestic product is expected to collapse by 3.9 percent this year. In 2021, growth of around 2.5 percent should then be sufficient – “provided the Covid situation gradually normalizes”. So far, the IMF had assumed a plus of 2.8 percent.
The economy may also be weaker if stronger lockdowns are necessary in the fight against the spread of the corona. “In addition, geopolitical tensions are dampening the outlook,” stressed the IMF.
The Russian central bank cut its main interest rate this year to a record low of 4.25 percent in an attempt to stimulate the economy with cheap money. The country is not only suffering from the pandemic, but also from low prices for its export hit, oil. The central bank could even cut interest rates below four percent, said IMF Russia expert Jacques Miniane. The comparatively low inflation rate, which should remain in the range of 3.0 to 3.5 percent in the second half of next year, creates scope for this.