Russian central bank lowers key interest rate to 14%, says it sees room for more cuts

Russia’s central bank lowered its key interest rate to 14 per cent in a sharper-than-expected move on Friday and said it saw room for cutting rates further this year, as it tries to manage a shrinking economy and soaring inflation.

Friday’s rate cut exceeded expectations for a 200-basis-point move in a Reuters poll from earlier this week. Analysts predicted Russia would need lower rates in the face of a looming economic recession following the West’s imposition of unprecedented sanctions. A Reuters poll showed earlier on Friday that the central bank was expected to slash its key rate to 10.5 per cent by the year end as the firming ruble helps cap inflationary risks.

The central bank said consumer inflation was on track to accelerate to 18-23 per cent in 2022, far exceeding the 4 per cent target, which could be reached in 2024. It was at 17.6 per cent as of April 22.The central bank now needs to tame inflation that is near 20-year highs, while steering the economy through its steepest contraction since the years following the 1991 fall of the Soviet Union.

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