Russia’s Central Bank cuts Interest Rates

The Central Bank of Russia on Friday cut interest rates for the second time this month to support the economy hit by the war in Ukraine and the western sanctions.

The Bank of Russia cut interest rates from 17% to 14% after cutting borrowing costs from 20% on April 8. Policymakers, led by central bank chief Elvira Nabiullina doubled the key rates in an emergency meeting in February as the country struggled to support the ruble after half of the country's foreign exchange reserve was frozen by the western governments. 

The central bank imposed capital restrictions to prevent Russia from taking money out of the country and required national exporters to convert most of their foreign exchange income into rubles. These measures helped strengthen the ruble, and the central bank said that it helped delay the sharp rise in consumer prices in the weeks immediately after the invasion.

However, the central bank also said that western sanctions would cause significant economic damage this year, with gross domestic product expected to be between 8% and 10%, in line with the latest International Monetary Fund valuations.