AFP, Moscow :
Russia’s central bank said Monday it saw the country’s growth rate slowing to just 0.4 percent this year, while warning it would raise rates further if needed to combat inflation.
Moscow forecasts 0.5 percent growth in 2014, while the IMF believes that Russia is already in recession, the economy hobbled by structural problems as well as concerns over the Ukraine crisis sparking an increase in capital flight.
Russia’s central bank on Monday held its benchmark interest rate steady at 7.5 percent, after raising it twice since March to keep a lid on inflation as the ruble slides.
But the bank warned it would raise rates again if necessary.
“In case existing inflation risks materialise, and threats to medium-term inflation targets emerge, the Bank of Russia will continue increasing the key rate,” it said in a statement.
Russia’s core inflation, which excludes volatile energy and food prices, came in at 7.0 percent in May, and the bank said it looked unlikely it would fall back to its 5 percent target level this year.
It acknowledged the “geopolitical situation” would likely continue to affect the value of the ruble and thus inflation, while the lower value would provide a “limited” boost to economic output.
The West has imposed limited sanctions against Russia over the Ukraine crisis, but this has put a chill on foreign investment in the country and $100 billion (74 billion euros) in capital is believed to have fled the country this year.
Russia’s economy grew by 0.9 percent in the first quarter of this year on an annual comparison.
