June 16 (UPI) -- Crude oil prices are lower than expected following a decision to extend an OPEC-led production deal, presenting a risk to growth, Russia's Central Bank said.
Contrasting a decision from the U.S. Federal Reserve this week to raise its rates, Russia's Central Bank said Friday it was cutting its key rate to 9 percent annually.
"Mid-term risks remain elevated," the bank's press secretary said in a statement. "First, they are connected with the further dynamics of oil prices, which [under the agreements reached] began to take shape at a lower level than expected."
Russia is party to an agreement led by the Organization of Petroleum Exporting Countries to offset supply-side strains by trimming production. Russia is the largest contributor among non-OPEC members.
OPEC last month opted to extend the agreement by three months into March 2018. Market watchers had anticipated deeper cuts, which along with rising U.S. shale oil production, helped push crude oil prices below $50 per barrel.
Speaking last week before Russian lawmakers, Central Bank Gov. Elvira Nabiullina said the economy is "very close" to its target of reducing inflation from 7 percent to as low as 3 percent, but the overall situation is "volatile." She said after the OPEC-led effort was brokered in November that recovery for the Russian economy would be slow with only minor growth for gross domestic product expected this year.
In its rate policy statement, the Bank of Russia said gross domestic product should grow between 1.3 percent and 1.8 percent in 2017, an improvement from recessionary strains last year.
In the consumer sector, the bank said there were signs of recovery emerging.
"Consumer lending creates no significant inflation risks so far," the bank said.
Russian news agency Tass published data Thursday from All-Russia Public Opinion Study Center that found about 20 percent of the 1,600 people taking part in its survey told investigators the state of the economy in general was a concern.