Russia's central bank on Friday held its key lending rate at 10.5 percent as inflationary pressures weighed off against trying to spur a faster economic bounce back. The Bank of Russia said in a statement that it made the move as "the decline in inflation expectations has stalled" but insisted that it remained on target to meet its long-term targets of 4 percent inflation by the end of 2017. The majority of economists predicted that the bank would hold the rate steady after trimming it in June for the first time in almost a year.
The Bank of Russia said that decision was down to decreased inflation risks but that it did not signal the start of a cycle of cuts. The last few weeks have prompted cause for caution over inflation as figures for June saw household incomes that have been hit for two years over the economic crisis rebound. The ruble also remains volatile after a recent bounce back gave way to a fall as oil prices have slipped down. The bank said that at its next meeting it "will consider the possibility of a further rate cut based on estimates for inflation risks and the alignment of inflation decline with the forecast trajectory."
Russia's energy-reliant economy is still mired in recession due to a punishing economic crisis caused by the fall in oil prices and Western sanctions over Moscow's meddling in Ukraine. Officials have insisted the recession is slowing and economy minister Alexei Ulyukayev predicted that the economy will shrink by 0.2 percent overall this year after a drop of 3.7 percent in 2015. International experts however remain more downcast on Russia's prospects with the IMF forecasting GDP will shrink by 1.2 percent this year.
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