The Russian Central Bank lowered its main interest rate to 7.75 percent from 8.5 percent on Friday. The Central Bank has now embarked on a new rate-cutting cycle as inflation - its key area of responsibility - had weakened more than expected.
With inflation risks subsiding, the central bank has an opportunity to lower the cost of borrowing to help underpin an economic recovery. Annual inflation slipped to 3.3 percent in August, below the bank’s target of 4 percent.
Russian Central Bank said the central bank still needs to “anchor inflation expectations”, which could be done by 2019 when the bank’s main rate could reach 6.5-7 percent.
