Russian Central Bank Eases Interest Rates

(MENAFN) The Russian Central Bank opted on Friday to reduce its primary interest rate by 200 basis points, bringing it down to 18%, citing that “inflationary pressures” are subsiding more swiftly than previously anticipated.

This latest adjustment lowers the rate to its lowest level in nine months and represents the second straight reduction.

“Current inflationary pressures, including underlying ones, are declining faster than previously forecast,” the institution declared in an official statement.

The bank observed that the expansion of internal demand is moderating and the economy is progressively returning to a stable and sustainable growth trajectory.

It emphasized that financial conditions will stay restrictive for as long as needed to guide inflation back to the targeted level by 2026.

"In the baseline scenario, this implies an average key rate in the range of 18.8–19.6% per annum in 2025 and 12.0–13.0% per annum in 2026 and means that monetary policy will remain tight for a long period," the bank noted.

It also indicated that inflation is expected to decline to 4% in the coming year, consistent with the existing monetary framework.

The Central Bank of Russia initially lifted its benchmark rate to 20% in response to the onset of the conflict between Russia and Ukraine.

The interest rate remained steady at 16% from late 2023 through the end of July 2024, following four back-to-back rate hikes earlier in 2024.

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