Central Bank of Russia cuts key rate 50 bps to 7.5%, as expected, as inflation slows

MOSCOW. Sept 16 (Interfax) - The Central Bank of Russia's board of directors decided on Friday to lower the key rate 50 basis points to 7.5% per annum.

Most analysts surveyed expected a 50 bps drop, however forecasts did vary from 25 to 100 bps.

"Current consumer price growth rates remain low, contributing to a further slowdown in annual inflation. This is due to both the influence of a set of one-off factors and subdued consumer demand. Developments in business activity are better than the Bank of Russia expected in July," the regulator said in a commentary to the decision.

"However, the external environment for the Russian economy remains challenging, invariably putting significant constrains on economic activity. Inflation expectations of households and price expectations of businesses remain elevated," it said.

"Moving forward, in its key rate decision-making the Bank of Russia will take into account actual and expected inflation dynamics relative to the target and economic transformation processes, as well as risks posed by domestic and external conditions and the reaction of financial markets," the Central Bank said.