Russian central bank cuts key rate by 1 pct point

Russia's central bank lowers one-week minimum auction repo rate in order to boost economic growth

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

The Central Bank of Russia (CBR) has reduced its key interest rate by 100 basis points to 11.5 percent from 12.5 percent for the fourth consecutive month, meeting economists’ expectations.

The bank stated that “lower inflation risks and persistent risks of considerable economy cooling," were key drivers for its decision.

“Amid significant contraction in consumer demand and ruble appreciation in February-May 2015, consumer price growth continued to slow down,” the CBR announced in a statement on Monday.

The bank also notes that it anticipates annual inflation to fall under 7 percent in June 2016 to reach a 4 percent target in 2017.

The CBR also added that further rate cuts may be expected depending on inflation in upcoming months.

However, the World Bank’s (WB) negative outlook on Russia’s growth overshadowed the central bank’s announcement. According to the WB, the Russian economy is expected to contract by 3.8 percent in 2015 and more modestly by 0.3 percent in 2016.

TRTWorld and agencies