Russia cuts key rate for first time in over 10 months

Russia's central bank cut its key interest rate by half a percentage point today, the first reduction in nearly a year after the ruble recovered thanks to a bounce in oil and fading inflation fears.
"The Bank of Russia Board of Directors decided to reduce the key rate from 11.00 to 10.50 per cent," the bank said in a statement.
"The Board of Directors notes the positive trends of more stable inflation, decreased inflation expectations and inflation risks against the backdrop of imminent growth recovery in the economy."
Russia is desperate to breathe life into its energy-driven economy, which is mired in a recession caused mainly by the drop in oil prices and Western sanctions imposed over Moscow's meddling in Ukraine.

The ruble has risen some 25 per cent since January as the price of oil has nearly doubled after hitting its lowest point in over a decade.
Inflation has now also steadied at around 7.3 per cent, according to the central bank, its lowest level since 2014.

The bank said that it was now marking down its inflation forecast for the end of 2016 to between five and six per cent and said inflation would hit its long-term target of four per cent by the end of 2017.
The rise in the national currency and stabilisation of inflation had ramped up pressure on the bank to cut its rate for the first time since late July 2015.

A slump in oil prices from their 2014 peaks and worries over inflation spelt the end of a series of rate reductions at the time as Moscow cut back following a monster rate rise in December 2014 aimed at stemming a dramatic ruble drop.
In its statement announcing Friday's reduction, the bank pledged it would also look to further cut back the key lending rate in the future.
"The Bank of Russia will consider the possibility of a further rate cut based on estimates for inflation risks and alignment of inflation decline with the forecast trajectory," the statement said.
The ruble weakened slightly today against the dollar to around 64.5 and to around 72.9 against the euro.

Central Bank chief Elvira Nabiullina said at a press conference that it had improved its forecast for the Russian economy overall this year to predict a contraction of between just 0.3 and 0.7 per cent.
The International Monetary Fund predicted last month that Russia's economy will contract by some 1.5 per cent this year before growing by 1 per cent in 2017.