The Central Bank of Russia has reduced its key interest rate from 7.75% to 7.5% in response to low inflation, observed Reuters.
There is scope for cheaper lending around the time of Russian presidential elections to take place next month.
According to reports, the Bank said there will be further reductions to the interest rate this year because the annual inflation rate at 2.2% is ‘sustainably low.’ Last year, the Bank lowered its interest rate six times because of high-low fluctuation.
“Annual inflation remains sustainably low. Inflation expectations are diminishing progressively. Short-term pro-inflationary risks have abated. Therefore the balance of inflationary and economic risks has shifted slightly towards the risks to economic growth,” the Central Bank said in a statement, “This year annual inflation is much less likely to exceed four percent. In this environment the Bank of Russia will continue to reduce the key rate and may complete the transition from moderately tight to neutral monetary policy in 2018.”
Lower interest rates indicate a favorable time for Russia’s economic boost because customer demand is heightened through low lending costs.