Russia’s central bank cut its benchmark rate to 11% on Friday and said it saw room for further cuts this year as inflation slows from more than 20-year highs and the he economy is about to contract.

She announced the move at a special meeting after cutting the policy rate to 14% in April, weeks after an emergency rate hike to 20% triggered by Russia’s decision to send tens of thousands of soldiers in Ukraine on February 24. The central bank, which has now cut its policy rate by a cumulative 900 basis points since February, said it “keeps open the prospect of a policy rate cut at its upcoming meetings.”

“Inflationary pressure is easing thanks to the dynamics of the ruble exchange rate as well as the noticeable decline in inflation expectations of households and businesses,” the bank said in a statement in English. The ruble has become the world’s best-performing currency this year, buoyed by capital controls Russia imposed in late February to limit financial stability risks and defend against sweeping Western sanctions.

The central bank said external conditions for the Russian economy are still difficult, but risks to financial stability have diminished somewhat, paving the way for some relaxation of capital controls. The ruble’s performance “gave policymakers the opportunity to reverse the emergency measures introduced since February,” Capital Economics analysts said in a note.

“We suspect the CBR will not continue this pace of easing…Further easing of capital controls and additional rate cuts appear likely,” they said. The ruble showed a limited reaction to the central bank’s decision, extending intraday losses and slipping to 60.90 against the dollar, down 2.7% on the day.

The central bank could further cut its key rate by 50 to 100 basis points at the next rate-setting meeting scheduled for June 10, said Dmitry Polevoy, chief investment officer at LockoInvest. Governor Elvira Nabiullina is due to speak at a banking conference in Moscow later today, where she could shed more light on her bank’s plans.

The central bank did not mention its inflation forecast for 2022, which previously stood at 18-23%, but said inflation would slow to 5-7% in 2023 before reaching its target of 4 % in 2024. Inflation slowed to 17.51% as of May 20. 17.69% a week earlier amid weaker consumer activity, the economy ministry said, but hovered near its highest level since early 2002.

High inflation is lowering living standards and has been a top concern for Russians for years. On Wednesday, President Vladimir Putin ordered a 10% increase in pensions and the minimum wage to protect Russians from inflation.

He denied that the country’s economic problems were all linked to what he calls his “special military operation” in Ukraine, which prompted the West to impose unprecedented sanctions against banks, companies, heads of company and personalities close to the Kremlin.

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