Russia cuts interest rate as economy shrinks

AFP, MOSCOW: Russia’s central bank on Monday cut its key interest by one per centage point to 11.5 per cent as it tried to ease the pain for an economy battered by Western sanctions and lower oil prices.
The rate cut is the fourth this year after authorities hiked interest rates dramatically in December to 17 per cent as the ruble nosedived.
The Bank of Russia cited the “persistent risks of considerable economic cooling” in a statement explaining the move, forecasting that gross domestic product would fall by 3.2 per cent this year.
Following the rate cut Russia’s official statistics agency said that the economy had shrunk by 2.2 per cent in the first quarter of 2015 compared with the same period last year.
The figures were worse than expected after a preliminary estimate in mid-May put the contraction at 1.9 per cent.  
The authorities insist inflationary fears have subsided as they have chipped away at the interest rate over the past months in a bid to breathe life into the country’s shrinking economy.
Inflation in June slowed from a high in March to 15.6 per cent and is expected to go below 7.0 per cent by June 2016, the statement from the bank said.

Russia cuts interest rate as economy shrinks

AFP, MOSCOW: Russias central bank on Monday cut its key interest by one per centage point to 11.5 per cent as it tried to ease the pain for an economy battered by Western sanctions and lower oil prices. The rate cut is the fourth this year after authorities hiked interest rates dramatically in December to 17 per cent as the ruble nosedived. The Bank of Russia cited the persistent risks of considerable economic cooling in a statement explaining the move, forecasting that gross domestic product would fall by 3.2 per cent this year. Following the rate cut Russias official statistics agency said that the economy had shrunk by 2.2 per cent in the first quarter of 2015 compared with the same period last year. The figures were worse than expected after a preliminary estimate in mid-May put the contraction at 1.9 per cent. The authorities insist inflationary fears have subsided as they have chipped away at the interest rate over the past months in a bid to breathe life into the countrys shrinking economy. Inflation in June slowed from a high in March to 15.6 per cent and is expected to go below 7.0 per cent by June 2016, the statement from the bank said.