Consumer Prices : A Lengthy Disinflation Period

The Bank of Russia's decision to reduce the key rate by 0.50 pp to 6.5% was caused by an inflation slowdown to 3.8% in October 2019 relative to October 2018, with a high probability of its continuing downward movement. In this connection, the Bank of Russia has revised its inflation projections for 2019 from 4.0–4.5% to 3.2–3.7%. It is expected that the annual inflation index in 2020 will amount to 3.5–4.0%, and then it will be hovering around its target level of 4%. Thanks to this year's good harvest, a slow growth rate of domestic demand, and the ruble's strengthening, inflation slowdown may become even more pronounced than the Bank of Russia is currently expecting it to be. These developments may once more prompt monetary policy easing before this year's end