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The
central bank met after it unexpectedly cut the key rate to 17%
earlier in April following an emergency rate increase to 20%
days after Russia sent tens of thousands of troops into Ukraine
on Feb. 24.
Friday's rate cut exceeded expectations for a 200-basis-point
move in a Reuters poll from earlier this week. Analysts
predicted Russia would need lower rates in the face of a looming
economic recession following the West's imposition of
unprecedented sanctions.
"If the situation develops in line with the baseline forecast,
the Bank of Russia sees room for key rate reduction in 2022,"
the central bank said in a statement.
A Reuters poll showed earlier on Friday that the central bank
was expected to slash its key rate to 10.5% by the year end as
the firming rouble helps cap inflationary risks.
"Rouble exchange rate dynamics will remain a meaningful factor
shaping the path of inflation and inflation expectations," the
central bank said.
The central bank said consumer inflation was on track to
accelerate to 18-23% in 2022, far exceeding the 4% target, which
could be reached in 2024. It was at 17.6% as of April 22.
High inflation dents living standards and has been one of the
key concerns among Russians for years.
The central bank now needs to tame inflation that is near
20-year highs, while steering the economy through its steepest
contraction since the years following the 1991 fall of the
Soviet Union.
Russia's export-dependent economy will shrink 8-10% this year,
the central bank's renewed set of forecasts showed.
Central Bank Governor Elvira Nabiullina will shed more light on
the bank's forecasts and policy plans at a media briefing at
1200 GMT. The next rate-setting meeting is scheduled for June
10.
(Reporting by Reuters)
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