MOSCOW, January 26 (RIA Novosti) - Russia's Central Bank has cut the refinancing rate from 11% to 10.5%, the CBR's foreign and public relations department said Friday.
The rate comes into effect as of January 29, 2007, in line with the Board of Directors' decision.
At the end of 2005 the CBR cut the refinancing rate from 13% to 12%, and then to 11.5% and 11% in June and October 2006, respectively, to reduce borrowing costs and make loans more affordable.
The refinancing rate is a key part of a socially-oriented program outlined by President Vladimir Putin in September 2005, geared toward improving quality of life in the country.
The program comprises four so-called national priority projects: Comfortable and Affordable Housing, Development of the Agricultural-Industrial Complex, Health, and Education.
CBR First Deputy Chairman Alexei Ulyukayev said last year that the bank could cut the refinancing rate considerably given an inflation level of not more than 9% in 2006.
Last year's inflation aggregated 9%, down from 10.9% in 2005, according to the national statistics service.
A forecast for the country's social and economic development until 2009, prepared by the Finance Ministry, projects inflation at 6.5%-8% in 2007, 4.5-6% in 2008, and 4-5.5% in 2009.
However, late last year the economics ministry gave higher consumer price growth projections of 7% for 2008, and 6.8% for 2009. According to the ministry, inflation will slow down to 6.5% in 2010.
