(Bloomberg) -- Inflation in Russia edged closer to the lowest level in post-Soviet history, increasing the likelihood of a seventh consecutive interest rate cut later this month despite market volatility.
Annual inflation eased to 2.3% in February, the Federal Statistics Service reported Friday. The median estimate in a Bloomberg survey of 21 economists had forecast 2.2%.
The central bank has struggled to bring inflation back up toward its 4% target despite 175 basis points of easing in the past year. Certainty around another reduction this month has wavered as the global spread of coronavirus sparked a sell-off in Russian assets, but an emergency Federal Reserve rate cut put some bets back on the table.
“A 25 basis-point cut is now practically guaranteed in March and the likelihood of another reduction in the next few months has increased,” said Alex Isakov, an economist at VTB Capital in Moscow.
The ruble slumped again on Friday as global oil prices dropped to a more-than two year low and Russia resisted pressure from its OPEC allies to make deeper production cuts. Analysts at Raiffaisenbank and Nordea Bank in Moscow said that a pause in easing this month is still possible while the central bank waits to see how the fallout from the virus pans out.
“The virus isn't under control yet and the risk of a sell-off in the market remains,” Nordea analyst Tatiana Evdokimova said.
--With assistance from Zoya Shilova, Áine Quinn and Alex Nicholson.
To contact the reporter on this story: Anya Andrianova in Moscow at aandrianova@bloomberg.net
To contact the editors responsible for this story: Gregory L. White at gwhite64@bloomberg.net, Natasha Doff
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