Russia's central bank unexpectedly cuts its main interest rate as fears of recession mount following the fall in global oil prices and Western sanctions over the Ukraine crisis. Hayley Platt reports.
Just two days ago, Russia announced a $35 billion 'anti-crisis' plan to help haul it out of its deep economic troubles. Now it's gone a step further - by cutting its key interest rate by two points to 15 percent. The move caught markets unawares - analysts expecting rates to stay on hold just a month after a massive six and half per cent hike. But pressure from President Putin and other senior government ministers is thought have made the bank rethink. Its priorities now to resuscitate growth rather than clamp down on inflation. That turnaround could cast doubt on its credibility. That's one view. The other is that Russia's worry list needs drastic attention. Reuters Markets Correspondent, Jamie McGeever. SOUNDBITE: Reuters Markets Correspondent, Jamie McGeever, saying (English): ''It seems like Russia's being hit from all sides, from oil, from sanctions, from commodity price falls, and a soaring currency, rising inflation, capital flight, you name it, Russia's seems to being hit by it.'' The news pushed the rouble down by around 2.5 percent - adding to an already big slide this week. More falls could come, says Rabobank's Jane Foley. SOUNDBITE: Jane Foley, Strategist, RaboBank, saying (English): "The news from the credit ratings agencies - If we do get further downgrades there then I think the rouble can certainly fall further. We cannot rule out that the central bank may have to backtrack on today's interest rate cut and raise rates again." The bank says GDP will fall by 3.2 percent in annual terms during the first half of 2015. That's after a 0.6 percent rise in 2014. And with the EU fresh from announcing an extension of sanctions until September, there's little respite for Russia's export trade on the horizon.