Russian Central Bank Cuts Key Interest Rate

Russia's central bank on Friday cut its key interest rate by half a percentage point to 10 percent, the first reduction since June as Moscow seeks to jump-start its battered economy.

The bank said in a statement that the decision, expected by analysts, was due to a "decrease in inflation expectations and unstable economic activity", but noted it intends now to hold off on another cut until early next year at the earliest.

Inflation went down to 6.6 percent in September, compared to 7.2 percent in July, the bank said, attributing the shift to "more favourable external economic conditions" than expected.

"According to Bank of Russia estimates, to strengthen the trend to a steady decline in inflation the current key rate needs to be maintained till end-2016 with a possibility to cut it in 2017 Q1-Q2," the statement said.

Russia's energy-reliant economy is currently mired in the longest recession of President Vladimir Putin's 16-year rule on the back of low oil prices and Western sanctions over Moscow's meddling in Ukraine.

The purchasing power of average Russians has fallen precipitously as the ruble lost over half of its value since 2013, and the central bank has been particularly cautious over inflation fears, predicting it to fall to 4.5 percent by September 2017 and reach four percent by the end of next year.

In terms of overall economic performance, the bank predicted a return to possible GDP growth later this year after a drop of 3.7 percent in 2015.