World Bulletin / News Desk
Russia's central bank on Friday decreased its key interest rate to 9 percent from 9.25 percent in line with its policy to gently invigorate the country's economy.
The board "notes that inflation is close to the target, inflation expectations keep declining, and economic activity is recovering," the bank said, adding that it will continue "moderately tough" monetary policy to keep inflation in line.
Annual inflation in May stood at 4.1 percent, inching down over the past months towards Russian government's target of four percent. Though Russians are in "savings behaviour patterns," the bank observed "signs of nascent recovery in consumer activity."
The bank added it considers mid-term inflation risks "elevated", adding that it is likely to maintain a tight monetary policy "for a long time to anchor inflation close to its target."
Russia's GDP grew 0.5 percent in the first quarter of 2017, its statistics agency said last month, slowly recovering from a crippling economic crisis in the wake of the crash of oil prices and international sanctions in 2014, which diminished people's purchasing power.
The government expects growth to reach 2 percent this year.
Analysts said that while the downturn in the headline readings was disappointing, the economy continued to put in a strong performance.
Crude prices stabilised after diving more than two percent on Tuesday on increasing fears of a global supply glut, as continued production in the US and elsewhere offsets an OPEC output cut deal.
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"The Bank of Russia Board of Directors decided to cut the key rate to 9.00 percent per annum," the bank said in a statement. The cut follows a half-point decrease in late April.
Equity traders have suffered a fraught week as the crisis engulfing Donald Trump picks up pace, technology firms tumbled from recent highs and energy plays were hammered by plunging oil prices.
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In the eurozone, Frankfurt's DAX 30 index climbed 0.4 percent to 12,746.05 points, and the Paris CAC 40 gained 0.5 percent to 5,243.53 compared with the close on Thursday.
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While a "rebalancing of the market" was "underway," it was "at a slower pace than originally anticipated," the Organization of Petroleum Exporting Countries wrote in its latest monthly oil market report.