MOSCOW (dpa-AFX) – In view of an economic slowdown, the Russian central bank has reduced its key interest rate for the fifth time in a row. It fell by 0.5 percentage points to 16.0 percent, as the Russian central bank announced on Friday. Economists had expected this. In April the key interest rate was still at 21 percent.
“The economy continues to return to a balanced growth path,” the central bank explained the decision. She pointed to the fall in inflation in November. The price increase rate fell to 6.6 percent in November. However, it is still well above the central bank’s target of four percent. The central bank therefore continues to impose a restrictive policy monetary policy in prospect. A restrictive monetary policy is intended to dampen demand in order to slow down inflation.
The Russian economy is currently being supported primarily by arms production, which has been massively expanded due to the war of aggression against Ukraine. The labor shortage drives up wages and prevents production from expanding, which drives up prices.
However, the private sector suffers from high interest rates. According to economists, the current one is likely Interest rate cut will bring little relief given the continued high level. Tax increases are likely to boost inflation next year. The VAT is to be increased from 20 percent to 22 percent. This limits the possibility of future interest rate cuts./jsl/men