Russia Cuts Lending Rate to 8.5% as Inflation Hits Post-Soviet Low

By James Marson Features Dow Jones Newswires

Russia's central bank cut its key lending rate to 8.5% from 9% and said it could ease rates further in the next six months.

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The decision, announced after the bank's board met Friday, marked the fourth cut this year and comes after consumer price inflation hit a post-Soviet low in August of 3.3%, below the bank's target of 4%.

"During the next two quarters, the Bank of Russia deems it possible to reduce the key rates," the bank said in its statement.

The bank did caution, however, that while inflation expectations were falling, they weren't fixed at a low level.

Citing better economic performance in the second quarter, the bank raised its forecast of growth in gross domestic product this year to a range from 1.7% to 2.2%, following two years of recession.

"We think the large amount of spare capacity in the economy will continue to keep a lid on price pressures," said William Jackson, senior emerging markets economist at Capital Economics. He forecast that the key rate would be cut to 6% by the end of next year,

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Write to James Marson at james.marson@wsj.com

(END) Dow Jones Newswires

September 15, 2017 08:44 ET (12:44 GMT)