Gazprom shares plunge to 2008 levels after Central Bank of Russia cuts key rate

Despite the fact that Russia's central bank lowered its key interest rate from 14.5% to 14.25%, shares in the Russian state energy company Gazprom have sharply declined to their lowest level since 2008.

Source: Russian media outlet The Insider

Details: The central bank's decision marked the ninth consecutive easing of monetary policy, but the market reacted negatively as it had expected a more significant rate cut.

In addition, the modest reduction disappointed markets for two reasons: first, if the central bank is being so cautious, it suggests it sees major problems in the economy and inflation risks.

Second, the rate remains very high, making credit inaccessible for businesses, which in turn is expected to continue cutting costs and staff, causing the economy to decline.

The bank's statement also directly noted that a temporary reduction in motor fuel production is among the factors increasing inflationary pressures.

"Effectively, the Bank of Russia has for the first time acknowledged that problems in oil refining have become such a significant factor that they are now influencing inflation assessments and monetary policy decisions," The Insider writes.

According to TradingView data, Gazprom shares are trading at 106.3 roubles (US$1.45) – the lowest level since the 2008 financial crisis. At one point, the price also fell to 105.05 roubles (US$1.44).

Ukrainian strikes on Russia's oil infrastructure and the end of the war in the Middle East have also negatively affected the company's share price.

Background: After Russian leader Vladimir Putin visited China in May, Gazprom shares also dropped sharply. At that time, the price fell to 118 roubles (US$1.61), costing the company around 100 billion roubles (US$1.3 billion) in market value.

Support Ukrainska Pravda on Patreon!