Russia decreases interest rate to 15% to revive economy
The Russian Central Bank has decreased its key interest rate by two percent in an attempt to resuscitate the country’s ailing economy.
"The Bank of Russia Board of Directors decided to reduce the key rate from 17.00 to 15.00 percent per annum," read a statement issued by Russia’s Central Bank on Friday.
The new decision is made "due to the shift in the balance of risks of accelerated consumer price growth and cooling economy" and is aimed at “averting the sizeable decline in economic activity against the background of negative external factors," the statement added.
The bank, however, voiced optimism over the future of the Russian economy, saying the country will gradually manage to bring inflation under control.
“Inflation and inflation expectations are forecast to decrease as the economy gradually adjusts to changing external conditions,” said the statement.
Russia’s Inflation in 2014
Late in December 2014, Russia’s State Statistics Service (Rosstat) announced that the country’s annual inflation had drastically increased to 11.4 percent in 2014 with prices of food up by 15.4, non-food products by 8.1, and service costs by 10.5 percent.
The report added that the inflation was most overwhelming in December when consumer prices grew by 2.6 percent and the Russian ruble suffered a significant loss of value.
Banes of Russian economy
Russia has been hit with a series of sanctions by the US and the European Union, which accuse Moscow of supporting pro-Russia forces in eastern Ukraine, saying the Russian intervention poses a security threat to Ukraine and all other neighboring states. Russia categorically denies the allegation.
The Russian economy has been also strained by the tumbling oil prices. The reports show oil prices have plunged about 50 percent since June last year over increased supplies by certain countries such as Saudi Arabia, the largest producer in the Organization of the Petroleum Exporting Countries (OPEC), and a lackluster global economic growth.
OPEC, which produces about 40 percent of the world’s oil, last year decided against cutting its production to balance the market due to opposition from Saudi Arabia. Many analysts believe oil prices are being used as a political weapon against certain countries including Iran and Russia.
FNR/HMV/SS
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