Bank of Russia cuts rates for first time in a year

Russia's central bank cut its main policy rate, with officials referencing greater confidence in the outlook for inflation and slower price growth as the main reasons behind their decision.

Bank of Russia lowered its main policy rate, the one-week auction rate, from 11.0% to 10.5%, a move which only half the analysts polled by Bloomberg had correctly anticipated.

It marked the first reduction in interest rates in a year.

"The economy, as well as inflation, is performing better than expected, and overall inflation risks have abated. However, we still see the risks related to domestic factors, that is, the the inflation expectations inertness and uncertainty in fiscal policy," BoR Governor Elvira Nabiullina said in a statement.

Rate-setters in Moscow had set themselves a target of lowering consumer price inflation to 4.0% by 2017.

However, Nabiullina apparenty held off from signalling the start of a full easing cycle, saying there were risk factors which could slow the pace of retreat in prices, "calling for a tighter monetary policy for a longer period of time".

"Amid the persistent inflation risks it is essential that the monetary policy remain reasonably prudent."