Russian central bank slashes interest rate by 300bps

The Central Bank of Russia on Friday lowered its key interest rate by 300 basis points, seeing room for reduction this year.

The interest rate was lowered from 17% to 14%, the bank said.

Noting that the external environment for the Russian economy remained challenging with significantly constrained economic activity, the bank said: "With price and financial stability risks no longer on the rise, conditions have allowed for the key rate reduction."

The bank underlined that for the next meetings it will take into account actual and expected inflation dynamics relative to the target and economic transformation processes, as well as risks posed by domestic and external conditions and the reaction of financial markets.

"If the situation develops in line with the baseline forecast, the Bank of Russia sees room for key rate reduction in 2022," it said.

In the previous meeting, the bank also cut the rate to 17% from 20% after February's dramatic hike from 9.5% amid sanctions due to its war on Ukraine.