Economic Development Minister Alexei Ulyukayev on Saturday described Friday's decision by Russia's central bank to cut the key rate to 15% as "absolutely justified and necessary."
"I consider yesterday's decision of Bank of Russia to change the key rate - reduce it to 15%, - and, for that matter, all other instruments of refinancing of Bank of Russia, to be absolutely justified and necessary. I believe that this, on the one hand, means realization that financial stability risks have diminished - that was the main reason for December's decision to raise the rate. On the other hand, I completely share Bank of Russia's assessment of the balance between inflationary risks and risks or economic slowdown. It's unquestionably a responsible and positive measure," Ulyukayev said.
Ulyukayev had been first deputy chairman of the central bank, overseeing monetary policy, before his appointment as economic development minister.
Bank of Russia said its purpose of cutting the rate was to match an alleged change in balance between a risk of faster inflation and a risk of the economy cooling off. The bank argued that December's sharp rate hike had stabilized expectations of inflation and ruble depreciation to the extent that had been the regulator's target.
"By and large, Bank of Russia did achieve its goals. I believe that, at the moment, we have a situation that's predictable enough and a situation where market participants aren't having any excessive expectations of devaluation and inflation," said Ulyukayev.
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