Financial news agency, April 29 (editor Niu Zhanlin) on Friday (April 29), local time, in order to reduce the impact of various sanctions from western countries, the Central Bank of Russia lowered the key interest rate by 3 percentage points to 14%.

The Bank of Russia also said that there is still room to reduce the key interest rate in 2022, and the annual average key interest rate in 2022 will remain between 12.5% and 14%,

At present, the focus of the central bank has shifted to supporting the Russian economy.

After the conflict between Russia and Ukraine and the unprecedented sanctions that followed, the Russian central bank is trying to cope with the sharply shrinking economy and soaring inflation.

Economists predict that the Russian economy will shrink by double digits in 2022, and the annual inflation rate in Russia will continue to rise in recent months due to the basic effect, reaching about 20% by the end of the year.

Statistics from the Russian Bureau of statistics this week showed that Russian industrial production increased by 3% in March and 5.9% in the first quarter of 2022. Russian real disposable income fell by 1.2% in the first quarter.

In addition, the Russian Ministry of economic development said that Russia's annual inflation rate rose to 17.7%.

According to the prediction of the Central Bank of Russia, the Russian economy will shrink by about 8% to 10% in 2022, the gross domestic product (GDP) of Russia will decline by about 3% in 2023, and will rise by about 2.5% to 3.5% in 2024.

In addition, the Central Bank of Russia also raised its total capital outflow forecast in 2022 from $75billion to $151billion.

The Bank of Russia also said that the annual inflation rate is expected to be between 18% and 23% this year, and will slow to 5% to 7% by 2023, and return to the target of 4% in 2024.

The Bank of Russia said in a statement, "the external environment of the Russian economy is still challenging, which seriously restricts economic activities. With the price and financial stability risks no longer rising, the conditions for interest rate cuts are now in place.

And the latest weekly data shows that the current price growth has slowed down against the backdrop of the strengthening ruble and cooling consumer activity. "

Despite various difficulties, Russian banks have weathered the liquidity crisis and the ruble has rebounded strongly, largely due to the rise in commodity prices and capital controls.

Against the backdrop of the extremely strong US dollar, the Russian Ruble still rose nearly 14% against the US dollar this month.

Piotr Mattys, senior foreign exchange strategist at InTouch capital, said, "in addition to the increasing confidence of the Central Bank of Russia in maintaining a relatively stable ruble exchange rate,

This unexpected decision also reflects the gloomy prospects facing the Russian economy due to sanctions. "

The Bank of Russia said that reducing inflation largely depends on whether Russia can successfully adapt to sanctions and replace imported products that are no longer supplied.

"Enterprises are facing major difficulties in production and logistics, and the supply channels of key imported materials have also been cut off."