Russia’s central bank has, as predicted by economists, decided on Friday to reduce its key rate by half of a percentage point, in a further attempt to kick-start the economy that has been in recession for almost two years.
The country’s central bank cut its main interest rate from 10.5% to 10% following the continuing rapid slowdown in inflation that has been null in the first two weeks of September.
The decision was mainly prompted by the risk of failure to deliver the 4% inflation target in 2017, which opens the door for another possible rate cuts in the first two quarters of 2017.
On a worse case for Russia, the country is seriously running out of cash as its rainy day fund has shrunk to an alarming $32.2 billion this month, with analysts expecting it to drop at a low $15 billion at the end of this year.
The fund was at sky-high $91.7 billion in September 2014 just before the disappointing collapse of oil prices, the same time Russia was being sanctioned by Western countries over its role in the crisis Ukraine.
The Russian ruble was up against the US dollar on Friday session as it advanced 0.3798, or 0.59%, to close at 65.08 while lost ground against the euro and was at 72.90 level, down from 73.20.
Major equities around the world closed mostly lower on Friday trading as investors await the Federal Reserve meeting this week and news on proposed sanction on Deutsche Bank cause a slide in oil futures.
Stocks indices in Europe touched their worst percentage decline since mid-June as the shares of Deutsche Bank shed 8.5% after the US Department of Justice give the German lender a $14 billion on mis-selling mortgage securities.
The pan European STOXX 600 dropped 0.8% while the German DAXX finished 1.5% lower at the close. THE FTSE futures settled 0.79% lower.In New York, the Dow Jones futures lost 89.30 points, or 0.49% at 18 123.18 while the S&P 500 gave up 8.15 points, or 0.38% at 2 139.12. The NASDAQ Composite slid 5.12 points, or 0.1% at 5 244.57.