Moscow The Russian central bank has eased its monetary policy more than expected despite the sanctions imposed as a result of the Ukraine war. The central bank announced on Friday that the key interest rate would be reduced by three points to 14 percent. Economists had expected 15 percent. The central bank promised further interest rate cuts this year. Already in March it had lowered the key interest rate by two points.
At the end of February, she had raised the interest rate drastically by 10.5 points to 20 percent. In doing so, she was reacting to the sanctions imposed by the West after the start of the war against Ukraine. With its interest rate hike, the central bank wanted to counteract the devaluation of the ruble and the risk of inflation. The ruble has recently recovered significantly. It is slightly above the level that prevailed before the start of the war.
“External conditions for the Russian economy remain difficult and severely limit economic activity,” the central bank wrote. However, the risks of inflation and financial stability have not increased further recently. This made the rate cut possible. The central bank apparently wants to support the economy, which has been weakened by sanctions, with the interest rate cut.
The central bank acknowledged that inflation is likely to rise further. In April, the inflation rate was 17.6 percent. A rate of 18 to 23 percent is expected for the year as a whole.
Top jobs of the day
Find the best jobs now and
be notified by email.
According to estimates by the central bank, gross domestic product will fall by 8 to 10 percent this year. “The decline will be mainly driven by supply-side factors,” the statement said. This apparently means the sanctions. Economic growth of two to three percent had previously been assumed.
More: Inflation in the euro area at a record high – prices rise by 7.5 percent