Russia’s central bank has cut its key interest rate by 50 basis points to 7.5% this Friday, in line with economists’ estimates, as it has signaled lingering economic risks from Western sanctions despite a decrease in inflationary pressures.
By cutting rates, the central bank aims to ease the ruble’s slide, make borrowing cheaper, and in turn help stem some economic damage stemming from the imposition of European and US sanctions on Russia in response to the conflict.
In a statement, the central bank said its latest rate decision was driven by weak consumer demand and other «unique factors,» which led to a slowdown in annual inflation. However, cost expectations for both households and businesses remain «elevated,» he warned.
Gross domestic product this year is expected to be closer to the «upper bound» of its July forecast of a 4% to 6% contraction. Meanwhile, the central bank’s annual inflation estimates have been revised down to a range of 11% – 13% from the previous expectation of a slowdown of 12% – 15%.
This morning, the RUB/USD pair is trading at 60.1627 (+0.61%).