Russia’s central bank slashes rate

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The Russian central bank slashed its key interest rate, Friday, just a month after dropping it to where it was before sending troops into Ukraine.
It said inflation was easing partly as consumer demand falls.

The bank lowered its key rate by 1.5 percentage points, to 8 percent.

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It said “in May-July, inflation gradually slowed down” due to the “strengthening of the Ruble and the correction of prices for goods that have risen in price earlier.”

It had hiked the rate as high as 20 percent in the wake of the February 24 military operation in Ukraine and the resulting Western sanctions that restrict dealings with Russian banks, individuals and companies.

As sanctions and the exit of Western companies from Russia have led to global economic isolation, the central bank has managed to stabilize the currency and financial system by preventing money from leaving Russia and forcing exporters to exchange most of their foreign earnings into rubles.

Central bank head Elvira Nabiullina said at a news conference Friday that the situation with the inflow of foreign currency in cash into the country is not expected to improve in the near future.

She added that restrictions introduced in March will be extended in September, in particular the 10,000 US Dollars limit of foreign currency that can be taken from bank accounts in cash per month.

Nabiullina, however, added that “even in the most apocalyptic scenario” cash dollars will continue to circulate in the country.

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