Russia cuts key interest rate to 7.25 pct as growth gains momentum

MOSCOW, March 23 (Xinhua) -- The Russian central bank on Friday lowered its key interest rate for the second time this year by another 25 basis points to 7.25 percent, citing eased inflation.

"The Bank of Russia forecasts the annual inflation (rate) will be 3-4 percent in late 2018 and remain close to 4 percent in 2019," the bank said in a statement.

"In this environment the Bank of Russia will continue to reduce the key rate and complete the transition to neutral monetary policy in 2018," it added.

The annual inflation rate stood at 2.2 percent in February, the same as in the previous month.

The inflation rate in 2017 was 2.5 percent, down from 5.4 percent in 2016, which allowed the central bank to cut its key interest rate six times last year.

The bank said economic growth resumed in Russia in early 2018, following a short period of decline "due to temporary headwinds" in late 2017.

The annual industrial production growth returned to the positive territory in the first two months of 2018, supported by continued growth in investment.

The recovery in consumer demand was underpinned by rising real wages and expanding retail lending, it said.

The bank maintained its GDP forecast at 1.5-2 percent for the 2018-20 period. Enditem