Russia's Central Bank lowered its key interest rate from 14.25% to 14% on Friday as it continues down a cautious path of monetary easing despite concerns that Ukrainian attacks on Russian oil refineries and commercial sites will fuel a renewed inflation surge.

The 25-basis-point cut was not guaranteed. While some analysts had predicted a "cosmetic" lowering, others leaned toward the possibility of the Central Bank leaving its key rate unchanged due to disruptions to domestic oil refining capacity and higher fuel costs, as well as a tightening labor market.

Since hiking borrowing costs to a two-decade high of 21% to tame wartime inflation, policymakers have gradually eased the key rate amid mounting signs of an economic slowdown. Friday's rate cut marks the tenth since October 2024.

Russia has been grappling with weaker oil and gas revenues and rising government spending, largely linked to its wartime economy. The growing deficit has fueled concerns about the sustainability of state finances after the government missed its budget targets by a wide margin last year.

This is a developing news story.

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