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. Last Updated: 07/27/2016

Central Bank Cuts Benchmark Rate to 10.5%

The Central Bank lowered its main interest rates by a quarter percentage point on Monday, while reiterating its concern about greater ruble volatility because of uncertainty over crude oil prices.

The Central Bank cut the refinancing rate to 10.5 percent from 10.75 percent and lowered the repurchase rate charged on Central Bank loans to 9.5 percent from 9.75 percent, effective from Tuesday. The bank has cut the rates six times since April 24. It last lowered them by a quarter point on Aug. 10.

The “sum total of macroeconomic trends” allowed the bank to “maintain the tempo of lowering interest rates,” it said in a statement.

“Further steps on lowering interest rates will depend on inflationary trends, the dynamics of output and lending activity, and the state of market interest rates,” it said.

The country’s benchmark refinancing rate is the second-highest in Europe, after Serbia’s and Iceland’s 12 percent.

“The Central Bank was cautious as it expects the fall in consumer demand to bottom out in October and November, increasing inflationary risks,” said Elina Ribakova, chief economist for Citigroup. “But the authorities have a bias toward growth and will likely continue easing monetary policy even in the face of faster inflation.”