Moscow: The Russian central bank cut its key rate by 50 basis points to 15% on Friday, as expected, citing slower inflation, but warned that external uncertainty had increased significantly.
"In February, price growth predictably decelerated after a temporary acceleration in January," the central bank said in a statement.
"However, uncertainty regarding the external environment has increased considerably," it added.
Russia has benefited from the Middle East crisis as prices for oil and other commodities it sells have risen, and the U.S. has lifted some sanctions on Russian oil for the first time since the start of the Ukraine conflict.
The rate cut decision makes Russia an outlier, as central bank in other major economies have warned of rising inflation risks due to higher energy prices and global supply disruptions as a result of the war launched by the U.S. and Israel against Iran.
The central bank raised its 2026 inflation forecast to between 4.5% and 5.5% at a meeting in February but is expecting inflation to return to its target of 4% in 2027. On an annual basis, inflation slowed to 5.79% as of March 16, down from 5.84% one week before.
Before the surge in oil prices, the Russian government was working on an austerity package that could include a 10% cut in non-essential budget spending. The rise in its oil revenues may put such plans on hold.
The rouble has slid by 9% since the start of March, a move that analysts and top businessmen believed was long overdue. A weaker rouble will boost the state's and major companies' revenues from exports.
The rate cut will support Russia's flagging economic growth, which slowed to 1% in 2025 from 4.3% in 2024. However, leading businessmen have said that a key rate of 12% is needed for investment and growth to accelerate.
Source Name : Economic Times