MOSCOW: Russia’s central bank has cut its key interest rate by one percentage point to 14%, as concerns over inflation recede as Russia’s economy falters, BBC reported.
The move, which was widely expected, comes as the rouble stabilises following its radical 46% decline in 2014.
That drop prompted the bank to increase rates up to 17% in an effort to halt the plunge.
The rate rise strengthened the rouble against the dollar.
In January, Russia’s central bank surprisingly cut rates from 17% to 15%.
Interest rates were increased last year to encourage saving rather than spending after the currency’s plummeting value prompted some Russians to snap up foreign goods in case its value fell still further.
Demand for goods during that spree allowed shopkeepers to raise prices, prompting high inflation.
Although inflation still remains high – February’s reading showed that prices were increasing by an annualised rate of 16.7% – economists expect that depressed economic conditions, including rising unemployment, will lead to decreased demand and lower prices.
Russia’s economy has been hit hard by the declining oil price as well as the impact of Western sanctions of its involvement in Ukraine.
