The Russian Central Bank cut its key interest rate for the second time this year and has warned to make more cuts to come as inflation.
The Central bank reduced the key rate to 9.25% from 9.75%, a much larger cut back that what analysts and economists are expecting that was shown in a poll by Reuters predicted.
The Russian central bank stated in that "Given the decision taken and moderately tight monetary policy sustained, the Bank of Russia forecasts that annual consumer price growth will reduce to 4 percent before the end of 2017 and will remain within this target level in 2018-2019.”
The central bank said it was sticking to its plans of making a gradual rate cuts, in the second and third quarters of this year.
The central bank’s governor, Elvira Nabiullina, stated last week that the bank would consider cutting rates by 25 or 50 basis points.
Despite the slowdown in inflation to a 4.2 – 4.5 percent in late April from levels if nearly 17 percent more than two years ago, the bank repeated its concerns about inflation and volatility ib the global markets.
The Russian Ruble dropped quickly to 57.19 versus the dollar before returning to a level of 57.04.
When making decisions, The Russian Central Bank said that it would take into consideration, its baseline scenario, which assumes a drop in oil prices to $40 per barrel by the end of the year.
The next meeting on whether to hold its next rate-setting meeting would occur no later than the third week of June.