Russia's Central Bank Keeps Key Interest Rate at 4.25%

By Georgi Kantchev

Russia's central bank kept its key interest rate unchanged amid elevated geopolitical risks and uncertainty about the coronavirus pandemic's impact on the economic recovery.

On Friday, the bank held its benchmark rate at 4.25%, following several cuts last year that drove the rate to a post-Soviet low. The bank said it would monitor current economic and price movements as well as external risks ahead of its next decision.

The Russian ruble has remained weaker in recent weeks against the dollar amid deepening tensions with the U.S. and Europe over the jailing of opposition leader Alexei Navalny. After the bank's decision, the ruble was down 0.7% against the dollar at 74.25 rubles to the dollar.

The currency's volatility, along with an uncertain recovery due to the continuing pandemic and rising inflation, have constrained the central bank's options, analysts say. The Russian economy has been pummeled hard by the virus and low oil prices since last year. Russia recorded the fourth-highest number of Covid-19 infections tally in the world, with more than four million cases reported.

The bank said Friday that the Russian economy has been recovering but that the upward path remains uneven.

"High-frequency indicators of economic activity suggest that the economic recovery in early 2021 is ongoing," it said in a statement.

"The medium-term economic growth path will be largely influenced by further coronavirus pandemic developments in Russia and globally, the nature of the recovery of private demand in the context of potential change in consumer and business behavior, as well as by the path of budget consolidation," the bank said.

Write to Georgi Kantchev at [e-mail]

(END) Dow Jones Newswires

02-12-21 0558ET