MOSCOW, Sept. 6 (Xinhua) -- The Russian central bank on Friday slashed its key lending rate by 0.25 percentage point to 7 percent, citing a continued inflation slowdown.
Year-on-year consumer inflation declined to 4.3 percent in August from 4.5 percent in July, which showed that the most sustainable price movements are close to 4 percent, it said in a statement.
Consumer demand trends constrained inflation, while the lower prices of fruits and vegetables on the back of early harvests and the rather stable prices of motor fuel also contributed to slowing consumer price growth, the bank said.
Taking into account the actual inflation dynamics, the bank has lowered its end-of-year inflation forecast for 2019 to 4-4.5 percent from 4.2-4.7 percent, with inflation continuing to decline to the targeted 4 percent.
The Russian economy's growth rate is still lower than the central bank's expectations due to weakening external demand for Russian products caused by a global economic slowdown and sluggish investment activity, including government investment, it said.
However, an expected expansion in government spending, including investment expenditures, in the second half of the year could boost economic growth, the bank said.
The central bank said it had lowered its gross domestic product growth forecast for 2019 to 0.8-1.3 percent from 1-1.5 percent.