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Interest rates are cut by the Russian central bank to prewar levels

According to the Russian central bank, inflation and economic activity are developing better than expected despite harsh sanctions imposed by Western nations for the war in Ukraine. Interest rates were cut back to their prewar levels on Friday.

As a result, the banks lowered their key interest rates by 1.5 points, to 9.5%. Before the Feb. 24 invasion of Ukraine and subsequent sanctions imposed by the United States, the European Union and other nations restricting dealings with Russian banks, individuals and companies, the key rate had been as high as 20%.

Inflation was an annual 17% in May but appeared to have passed its post-invasion peak of 17.8% and to be headed down amid lower price increases in May and June, the central bank said. It predicted inflation would average 14% to 17% this year, decline to 5% to 7% next year and return to 4% in 2024.

Those measures have helped push the Russian currency’s exchange rate to 58.12 against the dollar Friday, compared with 78.8 rubles to the dollar on Feb. 23, the day before the invasion.

10 June 2022


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