(Reuters) – The Russian central bank sharply cut its key rate to 17% on Friday and said it holds open the prospect of further cuts at upcoming meetings.
Last month, the central bank kept its key interest rate at 20% following massive emergency hike in February and said it would start buying OFZ government bonds, warning of an imminent spike in inflation and a looming economic contraction.
On Friday, the central bank unexpectedly cut the key rate by 300 basis points, taking the decision ahead of its next regular meeting set for April 19.
“Today’s decision reflects a change in the balance of risks of accelerated consumer price growth, decline in economic activity and financial stability risks,” the central bank said, adding that it “holds open the prospect of further key rate reduction at its upcoming meetings.”
The central bank added that annual inflation will continue to grow due to the base effect, yet the latest weekly data showed a slowdown in the price growth rate.
“The tightening of monetary conditions already in place is partly offset by the lending support programmes launched by the government and the Bank of Russia, but it will continue to limit pro-inflationary risks,” the statement said.
(Reporting by Reuters; editing by Andrew Heavens and Nick Macfie)
