The Bank of Russia has reduced its key interest rate by 50 basis points for the first time since October 2019 to 5.5 per annum. Bank officials refused to rule out further reductions of the rate at upcoming monetary policy meetings.
The move comes in the context of an historic plunge in oil prices which is bringing the Russian economy under intense pressure. Fuel prices have collapsed because of vastly reduced demand, the result of the coronavirus pandemic. Russia’s economy is forecast to contract by 4-6 percent in 2020, before returning in 2021 to growth levels of between 2.8 and 4.8 percent.
