Russian central bank cuts key interest rate by 300 basis points to 11%

The Russian central bank on Thursday announced it has cut its key interest rate by 300 basis points from 14% to 11%, effective from Friday.

“Inflationary pressure eases on the back of the ruble exchange rate dynamics as well as the noticeable decline in inflation expectations of households and businesses,” the Bank of Russia said in a statement.

Annual inflation in Russia reached 17.8% in April, but then slowed down to 17.5% based on an estimate as of May 20, thus it is decreasing faster than the central bank’s forecast made last month, it said.

The Bank of Russia said it forecasts annual inflation declining to a range of 5% to 7% in 2023 and further falling to 4% in 2024.

“External conditions for the Russian economy are still challenging, considerably constraining economic activity. Financial stability risks decreased somewhat, enabling a relaxation of some capital control measures,” it added.

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