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Russia’s central bank cuts key interest rate

People walk past an exchange office sign showing the currency exchange rates in Moscow in Moscow, Russia, Thursday, July 30, 2015. The Russian ruble is falling under the pressure of cheaper oil, reviving concerns over the country's economic outlook, particularly the perniciously high inflation rate. (AP Photo/Pavel Golovkin)
People walk past an exchange office sign showing the currency exchange rates in Moscow in Moscow, Russia, Thursday, July 30, 2015. The Russian ruble is falling under the pressure of cheaper oil, reviving concerns over the country's economic outlook, particularly the perniciously high inflation rate. (AP Photo/Pavel Golovkin)

By Associated Press 2 min read

MOSCOW (AP) – The Russian Central Bank cut its key interest rate by 0.5 percentage points to 11 percent on Friday, bowing to the pressure of businesses to make lending more accessible.

The bank’s decision comes as the ruble has dropped to a four-month low. Market watchers were saying that Russian monetary officials would have to choose between cutting the rate, thus helping Russian companies, and keeping it on hold to cushion the ruble’s fall and stem inflation.

Higher interest rates tend to bolster a currency and push inflation down.

The central bank explained in a statement that “a balance of risks now tilts to a significant slowdown of the economy despite a certain growth of inflation risks.” It said it expected the rate cut to not spur the inflation further because consumer spending has been declining.

Russian businesses complained of a lending squeeze, brought by sanctions against Russian banks as well as prohibitively high interest rates inside the country.