UPDATE - Russian central bank cuts key rate by 50 basis points

UPDATES WITH MORE DETAILS

By Tuba Sahin

ANKARA (AA) – Russia's central bank on Friday cut its key interest rate by 50 basis points to 7.5% from 8%, in line with market forecast.

It was the sixth consecutive rate cut as inflation continues to ease.

In August, Russia's annual consumer inflation rate fell to a six-month low of 14.3%, according to the latest data by the Federal State Statistics Service (Rosstat).

"Developments in business activity are better than the Bank of Russia expected in July. However, the external environment for the Russian economy remains challenging, invariably putting significant constrains on economic activity," the bank said in a statement.

It stressed that inflation expectations of households and businesses remained elevated.

The bank said it would take into account actual and expected inflation dynamics, as well as risks and the reaction of financial markets while deciding its key rate.

At its last meeting in July, the Bank of Russia cut the rate by 150 basis points to 8% from 9.5%, much above the market estimate, meaning that the key rate has been lowered by 1,250 basis points, or 12.5 percentage points, since February.

In February, the bank hiked the key interest rate from 9.5% to 20% in a dramatic move amid sanctions due to Russia's war on Ukraine.

The Russian ruble has weakened 26% against the US dollar since the start of the war on Feb. 24.

According to the central bank's forecast, annual inflation will go down to 11.0-13.0% in 2022, to 5-7% in 2023, and return to 4% in 2024.