Central Banks

Russian c.bank lowers key rate to 9.25 pct, pledges more cuts

Russian Central Bank Governor Elvira Nabiullina
Sasha Mordovets | Getty Images

Russia's central bank cut its key interest rate on Friday for the second time this year and hinted at more cuts to come as inflation, already at a post-Soviet low, continues to fall.

The central bank reduced the key rate to 9.25 percent from 9.75 percent, a deeper cut than analysts and economists polled by Reuters beforehand predicted.

"Given the decision taken and moderately tight monetary policy sustained, the Bank of Russia forecasts that annual consumer price growth will reduce to 4 percent before the end of 2017 and will remain within this target level in 2018-2019," the bank said in a statement on its web site.

The central bank said it was sticking to its previous plan of making gradual rate cuts in the second and third quarters of this year.

Elvira Nabiullina, the central bank's governor, said last week that the bank would consider cutting rates by 25 or 50 basis points.

The rouble weakened swiftly to 57.19 versus the dollar before returning to a level of 57.04.

Despite a slowdown in inflation to 4.2-4.3 percent in late April from levels of nearly 17 percent seen just over two years ago, the bank reiterated concerns about inflation and volatility on global markets.

When making further rate decisions, it said it would take into account its baseline scenario, which assumes a drop in oil prices to $40 per barrel by the end of the year.

The central bank is set to hold its next rate-setting meeting on June 16.

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