Russia’s central bank cut its benchmark rate sharply to 17% on Friday and said further cuts were a possibility as emergency measures curbed risks to financial stability, brought deposits back to banks. and helped to limit the threat of inflation.
Last month, the central bank kept its key interest rate at 20% after an emergency big hike in February and said it would start buying OFZ government bonds, warning of looming inflation and economic contraction.
Russia sent troops to Ukraine on February 24 in what it calls a “special military operation” to demilitarize and “denazify” its neighbor, prompting sweeping Western sanctions.
This Friday, the central bank unexpectedly cut the base rate by 300 basis pointstaking the decision before its next regular meeting scheduled for April 29.
He said the move reflected a shift in the balance of risks from accelerated consumer price growth, as well as a decline in economic activity, and added that the move contained the risk to financial stability.
“Financial stability risks are still present, but they have stopped increasing for now, including due to the capital control measures adopted. There is a constant inflow of funds for time deposits,” the bank said in a statement.
Annual inflation in Russia accelerated to 16.70% on April 1, the highest since March 2015 and up from 15.66% a week earlier, as the volatile ruble pushed up prices amid unprecedented Western sanctions that ruled out Russia from the global financial markets and limited their trade.
Source: CNN Brasil
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