The Russian central bank surprisingly cuts interest rates

Created: 04/08/2022, 14:47

The Russian rouble: The Russian central bank surprisingly lowers the key interest rate, citing an improvement in the economic crisis as the reason.

© Sven Hoppe/dpa

After the Russian attack on Ukraine and the sanctions imposed by the West, Russia's central bank doubled interest rates.

Now the monetary watchdogs see the worst over.

Moscow - The Russian central bank has announced a reduction in the key interest rate.

The central bank will lower the central interest rate by 300 basis points to 17 percent starting next Monday, the central bank announced on Friday.

After the start of the Russian military operation in Ukraine*, she had doubled the key interest rate to 20 percent.

The central bank explained on Friday that the risks to financial stability had not increased for the time being.

At the same time, the central bank was open to a possible further reduction at future meetings.

The next central bank meeting is scheduled for April 29th.

After the start of the war, as a result of which the West imposed far-reaching sanctions on Russia, the ruble initially lost massively in value, which additionally accelerated the already high inflation*.

However, the Russian currency has recovered in recent weeks.

Ukraine-News: Russian central bank sees "most acute phase of the economic crisis" over

The central bank said that the external conditions for the Russian economy are “still challenging”.

In the case of fixed-term deposits, however, a “regular inflow of money” can be observed and there is a “noticeable slowdown in the current rate of price growth, in particular due to the dynamics of the ruble exchange rate”.

In order to support the economy, the government in Moscow had also promised to buy shares in Russian companies and introduced measures to curb capital flight.

The central bank seems “confident that the most acute phase of the economic crisis is now over,” commented Capital Economics analyst Liam Peach.

The bank's capital controls and other measures prevented a "destabilizing" bank run, he said.