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Market Update

Russia Lowers Rate to 14% Citing Worries of Economic Cotraction

Author: Nigel Thomas
Last Update: 12:13 PM ET March 13 2015

Russia’s central bank lowered its reference rate for the second time in as many months as the bank sees weakening economy a greater risk than the elevated inflation.

Central Bank Governor Elvira Nabiullina told at a news conference, “an attempt to lower inflation” at any cost would be “a short-sighted strategy.”

The central bank made it clear that the contracting economy is a greater concern to policymakers that the inflation rate of 16.7%, highest in 13 years.

Nabiullina lowered reference rate by one percentage point to 14%, after unexpectedly cutting rate by two points in January.

Governor added that the Russia’s economy is expected to contract 3% and continue to shrink between 1% and 1.6% and a strong rebound of more than 6% in 2017.

Russia’s central bank raised rates six times last year, including a sharp rise of 6.5% in mid-December to arrest the falling ruble and cut off capital flight.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc