Russia’s central bank has warned today that economic growth in the country would “most probably” slide below one per cent this year, below the previously-forecast range of 1.5-1.8 per cent.
It also raised concerns over the above-target inflation which limits its ability to cut interest rates.
Central bank governor Elvira Nabiullina (pictured) said the bank’s not intending to cut its key lending rate from seven per cent until June at the earliest, despite the slowdown.
Ongoing tensions surrounding Russia over the Ukraine crisis have intensified the country’s wobbly economic health.
The situation poses something of a dilemma for the central bank, which is trying to reassure markets over the stability of the rouble, while also attempting to maintain its policy aim of letting the exchange rate reach its own level.
It raised its key lending rate to seven per cent from 5.5 per cent last month, following the hammering the rouble took after Vladimir Putin said Russia had the rate to invade Ukraine.
The rouble’s currently down 0.7 per cent against the dollar, while the Micex is up 0.8 per set at 1,345.
The bank’s next policy meeting is on 25 April, then 16 June.