The Russian central bank cuts interest rates to 17 percent
Created: 04/08/2022 11:56 am
Ruble banknotes: The Russian central bank lowers the key interest rate.
© Karl-Josef Hildenbrand/dpa
The rate decision came as a surprise.
The Russian central bank reacts to the sanctions of the West.
What does that mean?
Moscow - The Russian central bank has eased its monetary policy despite ongoing sanctions from the West.
The central bank announced on Friday in Moscow that the key interest rate would be reduced by 3.0 percentage points to 17.0 percent.
The rate decision came as a surprise.
The central bank promised further interest rate cuts.
At the end of February, she had raised the interest rate drastically by 10.5 percentage points to 20 percent.
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.
Recently, however, the ruble has recovered significantly.
It is now back to the pre-war level.
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"External conditions for the Russian economy remain difficult and significantly limit economic activity," writes the central bank.
"The risks to financial stability are still there, but have not increased for the time being, also thanks to the capital control measures that have been decided."
However, the central bank admits that inflation is likely to continue to rise.
In February, the inflation rate was 9.2 percent.
The figures for March will be published in the evening.
Economists expect the inflation rate to rise to 16.9 percent on average.
dpa