UPDATE: Russian central bank cuts key rate to 9.75% from 10%

(Adds comment of economic minister in paragraph 5)

MOSCOW, Mar 24 (PRIME) -- Russia’s central bank has lowered the key rate to 9.75% annually from 10%, as inflation is slowing down quicker than expected and inflationary expectations shrink, the regulator said on Friday.

In the first 20 days of March, annual inflation slowed to 4.3% from 5.0% in January,

“Inflation risks have somewhat decreased, although they are still too high. In these conditions the target inflation level of 4% will be achieved if the moderately tight monetary policy is maintained until the end of 2017 and will be preserved in future,” the regulator said.

The risks that inflation will not slow to 4% until the end of 2017 have decreased, the central bank said.

Economic Development Minister Maxim Oreshkin said inflation will reach 4% no later than in July. “The decision (to cut the key rate) mirrors a significant advance in inflation dynamics seen lately. In the coming months we expect inflation to continue slowing down partly due to the government’s policy to restrain tariff adjustments. The 4% level of inflation is to be achieved no later than in July,” he said.

Russia’s gross domestic product (GDP) has been growing in quarterly terms since the second quarter of 2016 and positive dynamics will remain. The central bank expects GDP to grow 1–1.5% in 2017 and 1–2% in 2018–2019.

Investor activity is gradually restoring, unemployment remains at a stable low level, and growth of capital investment is expected in January–March.

The central bank will estimate further inflation dynamics and may gradually cut the key rate in the second and third quarters of this year. The next meeting of the regulator’s board of directors devoted to the key rate is scheduled for April 28.

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