Putin’s $3 Billion Gift for Pensions Seen Clinching Rate Cut

This week’s announcement to spend more than 200 billion rubles ($3 billion) on a one-time January payment to pensioners, rather than proceed with a possible second increase this year in monthly retirement benefits, is set to help keep inflation in check, at least for now. That may give policy makers the confidence to reduce borrowing costs for the second time in 2016 when they meet on Sept. 16, according to Bank of America Corp., Raiffeisenbank JSC and Rosbank PJSC.

With parliamentary elections only weeks away, uncertainty over fiscal policy has kept the Bank of Russia on alert as it chases next year’s inflation target of 4 percent. The payment to retirees pushes back the risk to prices and takes the pressure off the central bank after it drove real rates to the world’s second-highest after Belarus.