The Russian central bank has eased its monetary policy again despite the ongoing sanctions against the country. The central bank in Moscow announced that the key interest rate would be reduced by 1.5 percentage points to 9.5 percent.

The Russian central bank has eased its monetary policy again despite the ongoing sanctions against the country. The central bank in Moscow announced that the key interest rate would be reduced by 1.5 percentage points to 9.5 percent.

On average, economists had expected a somewhat less significant interest rate cut to 10.0 percent. It is the fourth rate cut in a row. The central bank announced further cuts this year.

Annual inflation in Russia is 17.1 percent

“The external environment for the Russian economy is still difficult and significantly restricts economic activity,” the central bank described the situation in a statement. However, inflation has weakened more than expected. At the same time, economic growth has slowed less than feared in April.

However, despite a decline, the annual inflation rate was still 17.1 percent in May. The Russian central bank is aiming for an inflation rate of four percent.

Violent reactions to western sanctions

At the end of February, the central bank had raised the key interest rate drastically by 10.5 points to 20 percent. In doing so, she was reacting to the sanctions imposed by the West after the start of the war against Ukraine. With its interest rate hike, the central bank wanted to counteract the devaluation of the ruble and the risk of inflation. The ruble has recently recovered significantly. It is now even above the level before the start of the war.