Categories: Business

Russia cuts key interest rate to 14%, says inflation could hit 23% this year

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Russia’s President Vladimir Putin (L) and Russian Central Bank Governor Elvira Nabiullina

Alexei Nikolsky\TASS via Getty Images

However, with the ruble now returning to pre-war levels, policymakers are turning their attention to recalibrating the economy in an effort to absorb the impact of punitive sanctions from international powers.

“The external environment for the Russian economy remains challenging and significantly constrains economic activity. With price and financial stability risks no longer on the rise, conditions have allowed for the key rate reduction,” the central bank said in a statement Friday.

“Recent weekly data indicate a slowdown in current price growth rates on the back of a strengthening of the ruble and a cooling of consumer activity.”

The bank said its inflation outlook is set to be impacted by the future of its imports and exports, as it looks to navigate the stinging sanctions.

It added that it will “take into the account the need for a structural transformation of the economy and will ensure a return of inflation to target in 2024.”

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