Source link : https://london-news.net/russias-central-bank-implements-fifth-consecutive-rate-reduction-bringing-key-interest-rate-to-16/
On Friday, Russia’s Central Bank decreased its primary interest rate by a modest 0.5 percentage points, lowering it to 16% in what marks the fifth consecutive adjustment this year.
Policymakers have shown restraint in reducing the key rate following its increase to a two-decade high of 21% in September 2024, a move aimed at tackling soaring inflation primarily caused by extensive military expenditure.
In its statement on Friday, the Central Bank reiterated its previous stance, indicating that it will uphold a stringent monetary policy for an “extended duration” as it seeks to mitigate inflation, even as the economy faces a slowdown due to elevated borrowing costs.
As of mid-December, annual inflation reached 5.8% and is projected to stay below 6% at least until the year’s end, which is two percentage points higher than the Central Bank’s target. Officials anticipate that inflation will revert to the targeted level in the latter half of 2026.
The recent rate cut, similar to previous reductions, was widely expected, as an increasing number of voices within Russia’s business sector have cautioned that the combination of high-interest rates and an overappreciated ruble is creating a “perfect storm” that could hinder investment and adversely affect growth in the future.
According to earlier forecasts from the Central Bank, Russian GDP is anticipated to rise by only 0.5-1% this year, a decrease from the 4.3% growth reported by the state statistics agency Rosstat…
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Publish date : 2025-12-21 17:25:00
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