By Paul Hannon
Russia's central bank Friday cut its key interest rate for a seventh straight meeting, despite a surge in oil prices following the U.S.-Israel attack on Iran that promises to boost an economy that had been faltering.
The Bank of Russia lowered borrowing costs to 15% from 15.5%, down from a 2025 peak of 21%.
In a statement, the central bank said it may reduce borrowing costs further as the economy approaches "a balanced growth path."
"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," the statement said.
Russia's inflation rate picked up in January as the government raised a tax rate on sales to help pay for its war on Ukraine. However, inflation cooled in February, while the central bank said surveys pointed to a slowdown in economic growth.
Russia still remains one of the big winners from the war. Russian oil that struggled to find buyers before President Trump ordered the attack on Iran is now a hot commodity. The U.S. has eased sanctions, allowing purchases from key buyers of Russian crude.
The soaring price of oil and natural gas will lead directly to higher profits for Russian producers, and higher tax revenues for the government.
"Russia seems likely to be the biggest winner," the Centre for European Reform said in a note Friday. "Higher oil and gas prices will boost Russian export revenues, enabling the regime to ease pressure on the civilian economy, and to keep ploughing money into the war against Ukraine."
The central bank said that there is a risk that inflation will prove to be higher than forecast.
"The key proinflationary risks are associated with a deterioration in the global economic outlook and rising global price pressures amid increased geopolitical tensions," it said.
Write to Paul Hannon at paul.hannon@wsj.com
(END) Dow Jones Newswires
03-20-26 0720ET
