The bank also said that an unexpectedly severe contraction in domestic demand in the first half of 2015 meant that it may revise down its output forecast.
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MOSCOW-The Bank of Russian Federation cut interest rates on Friday for the fifth time so this year, citing economic risks, but declined to commit on whether there would be further monetary easing.
The central bank noted that major macroeconomic indicators demonstrated further economy cooling in Q2 2015.
The central bank raised the rate to 17 percent overnight in December last year to limit a plunge in the value of the ruble, but has been trimming the rate back down this year as the ruble recovered somewhat. There are now 60.6607 roubles to the US dollar.
Although the price of oil began to climb in April, since the beginning of June it has fallen again.
Given that consumer demand, the economy’s key driver, is falling faster than expected, the central bank warned it may worsen its full-year economic forecast.
Russia’s ruble fell with oil prices, extending its biggest monthly rout since January as the central bank opted for the smallest interest-rate cut this year to avoid stoking inflation.
Policymakers have implemented gradual cuts to the benchmark rate, following a 6.5 percentage point hike to 17pc just before Christmas, to try to stem a slide in the rouble.
Further decisions on the key rate will depend on the balance of inflation risks and risks of economy cooling, the bank said in a statement.
Russia’s economy has been crippled by Western sanctions following its annexation of Crimea, as well as sliding oil prices that are likely to keep Russian Federation in recession this year.
The central bank is trying to tame stubbornly high inflation without sending the economy into a deeper recession. The CBR has a target of 4 percent inflation by 2017.
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The next rate-setting meeting is scheduled for September 11.
