The Russian central bank further cuts interest rates to 7.5 percent

Elvira Nabiullina at the Saint Petersburg Economic Forum

The president of the Russian central bank last announced a reduction in the key interest rate on July 22.

(Photo: Reuters)

Moscow The Russian central bank is bracing itself against the recession with another key rate cut. It cut the key interest rate by 0.5 percentage points to 7.5 percent on Friday. It was already the sixth downward move in monetary policy this year. Experts interviewed by Reuters had expected the reduction. At the same time, the currency watchdogs around central bank chief Elvira Nabiullina canceled their orientation line for further monetary policy developments - known in technical jargon as forward guidance.

Nabiullina will hold a press conference in Moscow at 3 p.m.

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According to the central bank, Russia's gross domestic product (GDP) will shrink this year. The minus will probably be in the upper part of a range of four to six percent. After the invasion of Ukraine and sanctions imposed by the West the Russian economy experienced a steep downward slide in the spring. The gross domestic product (GDP) shrank by 4.0 percent in the months of April to June compared to the same period of the previous year.

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With the downturn should according to the central bank in Moscow However, the strong upward pressure on prices will gradually subside: annual inflation of 11.0 to 13 percent is expected for this year, which will fall to five to seven percent in 2023. For 2024, the central bank is expected to reach its inflation target of four percent again. In August, the inflation rate was 14.3 percent.

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