UPDATE 2-Russian central bank cuts key rate by 50 basis points to 15.5%

Russia's central bank cut its key ‌interest rate by 50 basis points to 15.5% on Friday, a bid to shore up a slowing war-time economy that has been grappling with some of the highest ‌interest rates in more than a decade.

Of the 24 analysts surveyed ‌by Reuters ahead of the decision, just eight out of 24 predicted a 50-basis-point cut. "The Bank of Russia will assess the need for a further key rate cut at its upcoming meetings ⁠depending ​on the sustainability of ⁠the inflation slowdown and the dynamics of inflation expectations," the bank said.

"The baseline scenario assumes the ⁠average key rate to be in the range from 13.5% to 14.5% per annum ​in 2026," it said. "This means that monetary conditions will remain tight." Russia's economy, which ⁠showed significant resilience to Western sanctions over the course of the first three years of the conflict ⁠in ​Ukraine, slowed down sharply last year after the central bank hiked the key rate to fight inflation.

Russia's government forecasts growth of 1.3% this ⁠year, after 1.0% in 2025. The central bank sees growth at 0.5-1.5% this year. "The upward ⁠deviation of the ⁠Russian economy from a balanced growth path is decreasing," the bank said. "Growth in domestic demand will moderate in the coming months. ‌Business ‌sentiment demonstrates the same expectations."