MOSCOW, March 10 (Xinhua) -- Russia's Central Bank plans to gradually lower the key interest rate from the current 10 percent to 6.5-7 percent, on the condition that the inflation remains at the target level, a top official said Friday.
"We will lower it but gradually. When the inflation rate reduces to 4 percent and firmly settles on that level, the (key interest) rate may be 6.5-7 percent. In the upcoming months there is a room for (key interest rate) cuts, though it is limited," Igor Dmitriev, head of the bank's Monetary Policy Department, told the local Komsomolskaya Pravda newspaper.
Inflation in Russia has recently fallen to its lowest level in years, close to the 4 percent target. According to the Federal State Statistics Service (Rosstat), consumer prices rose by 4.6 percent year-on-year in February, the lowest rate recorded since June 2012.
Nevertheless, with inflation expectations remaining high, the bank will have to maintain the key interest rate over 7 percent for the moment, the central bank official added.
Russia's economy began to contract in 2014, with the country's currency rouble suffering a sharp devaluation amid weak oil prices and western sanctions. In order to prop up the economy, the central bank introduced a number of measures, including a drastic increase of key interest rate which once reached up to 17 percent.
