Russia's central bank has cut its key interest rate from 9.5 percent to 8 percent, citing a slowdown in the annual inflation rate.
The 1.5 percentage point drop announced on July 22 brings the key interest rate to a level lower than before President Vladimir Putin sent troops into Ukraine in February.
The bank said consumer prices are easing partly because demand has been falling and inflation expectations have “significantly decreased."
Russia’s interest-rate cut is the opposite of recent steps by Western banks, which have raised rates to combat inflation fueled by the war in Ukraine. The European Central Bank on July 21 hiked rates by half a percentage point. The United States raised its key rate last month by three-quarters of a point.
Days after Moscow launched the invasion, the Russian central bank hiked its key rate to 20 percent to prop up the ruble amid Western sanctions that restrict dealings with Russian banks, individuals, and companies.
Since then, the Russian central bank has managed to stabilize the ruble and financial system by preventing money from leaving Russia and by forcing exporters to exchange most of their foreign earnings into rubles.
The ruble traded at 58.8 to the dollar on July 22, making the Russian currency worth more than the day before the invasion when it took 78.8 rubles to buy $1.
The central bank said in a statement that it expected annual inflation to edge down to 12 percent to 15 percent this year, then drop to 5 percent to 7 percent in 2023 and return to 4 percent in 2024.
The statement said companies were still facing difficulties with production and logistics and warned that "the external environment for the Russian economy remains challenging."