Russia snips rates to new historic low

26 December 2009, 17:00 PM

Afp, Moscow

The Russian Central Bank on Friday announced a cut in its main interest rates to a new historic low of 8.75 percent as the bank seeks to stimulate a fragile economic recovery. The 0.25 percentage-point cut, effective from Monday, marked the tenth Russian rate cut in a row since April. At the end of October, the rate had been reduced to below 10.0 percent for the first time ever. The bank said in a statement the cut in the main refinancing rate had been agreed against a background of lessening inflation in Russia, which is running at 9.0 percent this year compared with 13.5 percent in 2008. It said while there were signs of a pick-up of industrial output in Russia there was still no indication of a major improvement in credit activity of Russian banks. "The cut will reduce the impact of factors impeding the recovery and reinforce the trends towards GDP growth," it said.