Russia’s central bank has cut its benchmark interest rate for the third time since the beginning of April, in a new attempt to halt the ruble’s rising trend and support the local economy. Russia’s central bank cut its main interest rate from 26 this Thursday by 300 basis points from 14% to 11%.
Along with the previous two cuts, today’s decision reversed many of the drastic upward adjustments announced at the end of February to 20%, from the 9.5% announced at the end of February, following the Russian invasion of Ukraine and subsequent Western sanctions on Moscow.
At that time, the purpose of the rate hike was to support the ruble, which was depreciating rapidly against the dollar, and to contain inflation as imports became more expensive. But since then, the ruble has rebounded, benefiting from an increase in foreign exchange revenue from oil and gas exports, whose prices rose in the wake of the conflict.
In a statement made by the Central Bank of Russia, it was stated that “inflationary pressure has eased with the dynamics of the ruble exchange rate” and pointed to a “significant decrease in the inflation expectations of households and companies”.
On the other hand, the Central Bank of Russia emphasized that the external conditions for the domestic economy are “compelling, significantly limiting economic activity”.
The Central Bank of Russia left open the possibility of a “significant reduction” in the base rate at its next meetings. The monetary authority will meet again on 10 June. With information from Dow Jones News Wires.
source: Noticias
