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. Last Updated: 07/27/2016

Central Bank Moves to Reduce Lending Rates

The Central Bank said Thursday it would gradually lower its obligatory reserve requirement for commercial banks when it judges the cut would pose no threat to the country's macroeconomic stability.

Commercial banks currently have to keep on average 7 percent of their liabilities on household ruble deposits and 10 percent on corporate and foreign currency deposits in the Central Bank interest free.

They say the ratio is too high as it prevents banks from channeling more funds to increase their capitalization.

"For us, macroecomomic stability is priority number one," First Deputy Central Bank Chairman Oleg Vyugin said.

"When we see the reduction has no negative affect on Russia's macroeconomic stability and does not lead to higher inflation, we will do that [reduce the requirement]."

The obligatory reserve requirement is a key tool used by the central bank to lock excessive money supply that tends to fuel inflation.