The Central Bank of Russia (CBR) slashed its key interest rate on Friday from 11% to 9.5%. The regulator noted that inflation in the country shows signs of easing.
“The external environment for the Russian economy remains challenging and significantly constrains economic activity. At the same time, inflation is slowing faster and the decline in economic activity is of a smaller magnitude than the Bank of Russia expected in April,” the CBR’s statement reads.
It also indicated that further rate reductions may follow.
The CBR more than doubled rates in February, from 9.5% to 20%, after Russia was hit with an avalanche of sanctions by the US, EU, and other countries.
The hike was intended to prop up the ruble, which fell to record lows. The Russian currency has since recovered to multi-year highs.
The regulator also stated on Friday it expects annual inflation to be 14%-17% this year, before dropping to between 5% and 7% in 2023, and returning to its 4% target in 2024.