Russian Central Bank cuts key interest rate by 1.5 pct

Russia's Central Bank cut its key interest rate on Thursday by 1.5 percent, from 14 to 12.5 percent, noting that it could be further cut according to real situations.

The decision took into account the weakening of inflationary risks and latest appreciation of Russian currency ruble, the bank' s board of directors said in an online statement.

"There are signs of stabilization in annual inflation," the statement said.

Inflation has slowed down due to falling consumer demand in previous months, as the lowering of salaries, growth in part-time employment and falling retail loans also contributed to the trend, said the bank.

The regulator forecasted that the reduction of inflation rate will be faster than once anticipated and could be lower than 8 percent in 2016 and drop further to the target level of 4 percent in 2017.

Annual inflation rate amounted to 16.5 percent as of Monday. This is 0.4 percent lower than in March, when inflation hiked to its highest level since the start of current economic crisis, noted the central bank.

However, the bank warned that problems still exist as external economic conditions keep worsening for Russia, while the country is unable to swiftly replace banned imported goods and shrinking investments due to a generally high level of economic uncertainty.

These factors will lead to negative economic growth in 2015, the bank said. Endite