The Russian Central Bank unexpectedly lowered its key rate to 17% on Friday, after having drastically increased it to 20% in the wake of the first sanctions after the entry of Russian troops in Ukraine.
This decrease, effective from Monday, is justified by the fact that the risks for financial stability are still present, but have ceased to increase for the moment, notes the Bank of Russia in a press release, in particular due to the strict controls of capital it has put in place.
With the strengthening of the rouble, largely artificial but with a strong symbolic charge, this decision is a success for the Central Bank, a sign that the draconian capital and currency control measures have worked.
The Bank found that a steady inflow of funds was occurring in bank accounts and a noticeable slowdown in the current rates of price growth, including due to the dynamics of the ruble exchange rate was occurring.
March inflation figures are due later today. Breaking acceleration records at the start of the month, they nevertheless slowed down in the last week of March.
The rouble, which had collapsed to unprecedented levels in February and March, has largely recovered to its level before the entry of Russian troops into Ukraine.
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The Central Bank has hinted that a further cut could take place at the next meeting, scheduled for April 29.
The Central Bank seems confident that the most acute phase of the economic crisis is over, analysts from Capital Economics assure in a note.
Swift action taken by the Bank in February and March prevented a major and destabilizing bank run.