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Russian central bank seen cutting rates in June as economy slows: Reuters poll

Published 05/31/2019, 10:32 AM
Updated 05/31/2019, 10:35 AM
© Reuters. A view shows a Russian one rouble coin in this picture illustration

By Andrey Ostroukh

MOSCOW (Reuters) - Russia's central bank is now seen cutting rates in June, sooner than previously expected, as inflation is slowing amid sluggish economic growth, a monthly Reuters poll showed on Friday.

The average forecast among analysts and economists from 22 banks and companies polled in late May was for the key rate to be lowered to 7.50% from 7.75% at the central bank's board meeting on June 14.

The previous monthly poll in late April predicted a first rate cut in the third quarter of this year. Most of the forecasts in the Reuters poll are based on at least 10 individual projections.

Market expectations for a rate cut have grown after central bank officials said several times in May that a rate cut was likely in the second or third quarter.

By the end of the year, the central bank is seen cutting the key rate to 7.25%, the monthly poll showed.

Full-year inflation in 2019 is now seen at 4.6%, below the 4.7% level predicted a month ago. Inflation is set to reach the central bank's target of 4% next year, the poll showed.

The poll also revealed a slightly negative change in the economic outlook. Gross domestic product is seen growing by 1.3% this year, with forecasts ranging from 0.7% to 1.7%.

The April poll predicted a 1.5% GDP growth in 2019 after a 2.3% expansion in 2018.

In 12 months, the rouble is seen at 66.00 versus the dollar and at 74.94 versus the euro. The previous poll foresaw exchange rates of 65.65 and 77.58, respectively.

"The rouble remains vulnerable amid falling oil prices and a rise in concerns about trade wars," Nordea Bank said.

© Reuters. A view shows a Russian one rouble coin in this picture illustration

On Friday, the ruble's official exchange rates, set by the central bank, were 65.06 per dollar and 72.42 per euro, with the Russian currency under pressure from falling crude prices.

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