In June, the Bank of Russia cut its one-week auction to 11.5% from 12.5%. Just six months ago, Russia’s central bank boosted its benchmark interest rate to 17% from 10.5%. However, rising inflation there is seen as a hurdle to additional easing. Last week, the Bank of Russia estimated June inflation to be 15.6%. [Russia Economy, ETFs on the Mend]
Market observers expect more interest rate cuts from the Bank of Russia next year as the central bank looks to prop up the economy there. Sanctions from the West continue hampering the Russian economy.
“The bite of sanctions and lower oil revenue is also curbing consumers, as real wages tumbled 10% and retail sales fell 13%. Economists and the Russian government admit that the nation’s recession is likely to stretch into another year, contracting again in 2016,” according to Barron’s.
Market Vectors Russia ETF