Russia’s central bank cut its benchmark interest rate to 14% on Friday in a sharper-than-expected adjustment and said it saw room to further cut borrowing costs this year as it tries to manage an economy. in contraction and with rising inflation.
The central bank met after unexpectedly cutting the base rate to 17% in early April, following an emergency increase to 20% days after Russia sent tens of thousands of troops to Ukraine on February 24.
Friday’s rate cut beat expectations for a 2 percentage point dose of easing in this week’s Reuters poll.
Analysts predicted that Russia would need lower rates in the face of a looming economic recession following the imposition of unprecedented sanctions by the West.
“If the situation develops in line with the base forecast, the Bank of Russia sees room for a reduction in the base rate in 2022,” the central bank said in a statement.
A Reuters poll earlier on Friday showed the central bank was expected to cut rates to 10.5% by the end of the year, as the firm ruble helps limit inflationary risks.
The central bank said consumer inflation is on track to accelerate to 18% to 23% in 2022, far exceeding the official 4% target, which could be achieved in 2024. Inflation was at 17.6% in the 12 months until April 22.
Source: CNN Brasil
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