Russian central bank lowers key lending rate, cuts GDP growth forecast

Source: Xinhua| 2019-06-14 22:30:05|Editor: Li Xia
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MOSCOW, June 14 (Xinhua) -- The Bank of Russia on Friday lowered its key lending rate by 0.25 percentage point to 7.5 percent while reducing its economic growth forecast for this year.

The Russian central bank said in a statement that annual inflation, after hitting a peak of 5.3 percent in March, started to slow down and stood at 5.2 percent in April and 5.1 percent in May. The inflation rate is estimated to be at 5.0 percent by June 10.

The bank said it has lowered its forecast for annual inflation in 2019 to 4.2-4.7 percent from the previous 4.7-5.2 percent, while expecting consumer price growth to be near 4 percent in 2020.

The Russian central bank said the economic growth in the first half of 2019 was below its expectations.

The annual growth rate of industrial production in January-April was close to the level of the fourth quarter of last year, while export growth slowed due to weaker external demand and investment activity remained low, it said.

The annual growth rate of retail trade turnover was falling from February, it said, and the consumer demand and the labor market situation did not generate excessive inflationary pressure.

Taking into account gross domestic product (GDP) dynamics in 2018 and in the first quarter of 2019, the central bank revised its forecast for GDP growth in 2019 down to 1.0-1.5 percent from the previous 1.2-1.7 percent.

However, it said it expects to see higher growth in subsequent years with the implementation of national projects.

The Russian Economic Development Ministry currently puts Russia's GDP growth at 1.3 percent this year, but Minister Maxim Oreshkin said earlier in June that it may be higher.