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Russian Central Bank on Friday cut its key interest rate to 14 percent

The decision aims to decrease the risks of "even more significant economic slowdown," while not bringing additional inflation danger, said the bank's statement.

"Weak economic activity will facilitate inflation slowdown," the bank said, noting that the inflation might be spurred by possible revision of price regulation, tariff growth and the easing of fiscal policy.

The bank said it would be ready to further cut the key interest rate if inflation risks are alleviated. The next meeting of the central bank on key rate is scheduled on April 30.

This is second key interest rate cut by the bank this year. After an increase from 10 to 17 percent last December in the wake of financial panic, the rate was cut to 15 percent at the beginning of February.

Head of the bank Elvira Nabiullina said Friday that due to current monetary policy, the annual inflation rate would drop to nine percent in March 2016 and finally reach the target level of four percent in 2017.

"The inflation will peak in the second quarter (of 2015), then slow down to 12 to 14 percent by the end of the year and to 9 percent exactly in a year," she said.

"The decline of inflation rate will depend on how events would develop further and how the economic situation would change. Obviously, attempts to lower inflation rate at any costs would be a shortsighted strategy," Nabiullina added.

Moreover, the central bank chief predicted that Russia's gross domestic product (GDP) is to decrease by 3.5 to 4 percent in 2015, while the economy would hit the bottom in the first quarter of 2016.

"Risks of economy weakening remain higher than those of inflation speeding up. Economic situation would continue worsening until the first quarter of 2016," Interfax news agency quoted Nabiullina as saying.

According to her, growth would resume after Russia's economy adapts to the new conditions including oil prices growth, recovery of trade as well as investments. The recovery growth of GDP is expected at 5.5-6.3 percent in 2017, the bank said.

[Source: Xinhua, Moscow, 13Mar15]

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