Russia's central bank slashed its benchmark interest rate for the third time this year as higher lending rates weigh on business activity and damp economic recovery.
The Board of Directors of Bank of Russia, governed by Elvira Nabiullina, decided to cut the key interest rate by 100 basis points to 17.00 percent from 18.00 percent. The bank was expected to reduce the rate more sharply by 200 basis points.
Earlier, the bank had lowered the rate by 200 basis points in July and 100 basis points in June, which was the first reduction since 2022.
The central bank said it will maintain monetary conditions as tight as necessary to return inflation to the target in 2026.
The bank estimated that annual inflation will ease to 6.0-7.0 percent in 2025, and return to 4.0 percent next year and stay at the target further on.
Further actions on the interest rate will depend on the sustainability of the inflation slowdown and the dynamics of inflation expectations, the bank added.
Policymakers observed that tight monetary conditions continued to contribute to disinflation. As inflation expectations remain elevated, it may impede a sustainable slowdown in inflation, the board noted.
Further, they said the economy continued to return to a balanced growth path and lending growth has accelerated recently.
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