(MENAFN- AFP) Russia's central bank on Friday cut its main interest rate to 14 percent from 15 percent as it juggled the need to resuscitate its crisis-hit economy against fears of rising inflation.
The rate cut is the second since the start of the year after a mammoth increase in December that came as authorities scrambled to put a lid on economic turmoil sparked by Western sanctions over Ukraine and tumbling oil prices.
The bank said in a statement that it had "decided to reduce the key rate from 15 to 14 percent per annum taking into account that the balance of risks is still shifted towards a more significant cooling of the economy."
It said the reduction was not enough to pose "an additional threat of increased inflationary pressure."
The bank said that it would be prepared to consider further cuts if the risk of inflation falls.
"As inflation risks abate, the Bank of Russia will be ready to continue cutting the key rate."
The central bank predicted inflation of about 9 percent for the whole of 2015, while it is currently close to 17 percent.
It said high inflation was mainly caused by Western trade sanctions and the ruble depreciation which it said were "short-term" factors whose impact would taper out this year.
The hard-hit ruble rose slightly at the news, standing at 61.30 against the dollar and 64.89 against the euro at around 1100 GMT, after reaching 61.81 against the dollar and 65.35 against the euro earlier in the day.
Russia last cut its key rate to 15 percent from 17 percent on January 30 in a surprise move that sent the ruble tumbling. In December it had jacked up the rate from 10.5 percent to 17 percent, widely seen as untenably high.
Analysts said the rate cut had been expected and relatively conservative.
"Overall, the CBR took a balanced step," ING bank's Russia & CIS chief economist Dmitry Polevoy said in a research note, saying the move communicated the bank's "relatively dovish stance" but "sent a clear signal that the policy bias remains unchanged, i.e. there is more easing ahead."
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