Russia’s central bank slashes rate, saying inflation slows

MOSCOW –

The Russian central bankThe key interest rate of the bank was reduced FridayJust a month after dropping the bomb, it was back where it belonged before troops were sent into it. Ukraine, saying inflationPartially, the economy is still in easing mode despite falling consumer demand.

The bankThe key rate has been lowered by 1.5 percentage point to 8% It said inflationExpectations have been met “significantly decreased,”Spring 2021 levels were reached, but business activity declined slower than expected. June.

However, “the external environment for the Russian economy remains challenging and continues to significantly constrain economic activity,”The central bank saidIn a statement

ItThe rate was increased up to 20% after the election. Feb. 24 military operation UkraineThe resulting WesternSanctions that limit the use of sanctions RussianBanks, individuals, and companies.

AsSanctions and the withdrawal WesternCompanies from RussiaGlobal economic isolation has led to the central bankBy preventing money leaving, the government has been able to stabilize the currency as well as the financial system. RussiaAnd forcing exporters into exchanging most of their foreign earnings for rubles.

TheRubel traded at 58.8 against the dollar FridayIt is now worth more than it was the day before. UkraineIt took $1.98 to reach $1.78

The bank saidAnnual inflationIn 2016, it was 15.9% JuneComparable to 17.1% in MayIt was estimated that it dropped to 15.5% by the end of July 15. ItCite “subdued consumer demand”and the ruble’s currency rate for the fall.

“The recent essentially involuntary accumulation of savings is a compressed spring in the economy, which can cause dramatic consumption growth under certain circumstances,” central bankHead Elvira Nabiullina saidAt a news conference. “It can quickly speed up demand inflation when the offer of goods and services is limited.”

The bankExpectations inflationContinue to drop – to 12-15% next year, to 5-7% 2023, 4% 2024.

TheAs of today, the interest rate has been cut centralBanks around the globe are moving in the opposite direction and raising rates to combat inflation. inflationFuelled by Russia’sActivities Ukraine. The European Central BankOn ThursdayAs high energy prices related to the military operation push up consumer prices up to 8.6%, a larger-than-expected increase of half a point was made.

ThoseEnergy costs are rising. RussiaIt is also a major oil- and natural gas exporter. DespiteThe growth of energy income and its impact on the environment central bankbolstering indicators such as the exchange rate, the long term impact Russia’sEconomists predict that global isolation will lead to deeper economic stagnation and lower incomes in the future.