Russia Lowers Benchmark Interest Rate by Another 3 Percentage Points to 11% Per Year

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyunjung] On the 26th (local time), the Central Bank of Russia cut the benchmark interest rate by 3 percentage points to an annual rate of 11%. This is the third cut following two 3-percentage-point reductions earlier this month and at the end of last month.

The central bank held an extraordinary board meeting to decide the benchmark interest rate and announced, "Starting from the 27th, we have decided to lower the benchmark interest rate by 3 percentage points to an annual rate of 11%," adding, "Recent data over the past few weeks have shown a significant slowdown in the pace of inflation."

It also explained that the sharp decline in the ruble exchange rate helped ease inflationary pressures. The ruble exchange rate, which surged to 120 rubles per dollar in early March, has fallen to around 60 rubles due to strong regulatory measures and an abnormal trade surplus.

Russia's consumer price inflation rate was 17.8% in April and 17.5% as of the 20th of this month. The central bank forecasts that the annual inflation rate will drop to 5-7% in 2023 and further decline to the target range of 4% in 2024.

The possibility of additional benchmark interest rate cuts remains. The next regular board meeting to decide the benchmark interest rate is scheduled for the 10th of next month. Despite the economic turmoil caused by Russia's 'special military operation' in Ukraine and Western sanctions against Russia, the central bank made a dramatic hike from 9.5% to 20% on February 28. As market shocks eased somewhat, the rate was lowered to 17% on March 8 and further reduced to 14% on March 29.

This content was produced with the assistance of AI translation services.