Russia’s central bank cut its key interest rate following a meeting of policy makers Friday, a sign that efforts to stabilize the country’s financial system are having an effect.
In a statement announcing the reduction in the key rate to 14% from 17%, the Bank of Russia said the ruble’s
rebound from sharp losses in the days immediately following Russia’s February 24 invasion of Ukraine had slowed the surge in consumer prices during the subsequent weeks.
“The external environment for the Russian economy remains challenging and significantly constrains economic activity,” the central bank said. “With price and financial stability risks no longer on the rise, conditions have allowed for the key rate reduction.”
The central bank said inflation will return to its 4% target in 2024, having risen to between 18% and 23% this year. It said further cuts in the key interest rate may be possible this year. The key interest rate stood at 10% before the invasion.
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