June 19 (UPI) -- Russia's central bank cut key interest rates Friday to a record low 4.5 percent, citing stronger-than-expected "disinflationary factors" stemming from the coronavirus pandemic.
The cut amounted to a full percentage point and indicated Bank of Russia analysts foresee a longer road to recovery from pandemic-related restrictions than initially thought.
Bankers said there's a risk that Russian inflation next year might "significantly deviate" from the expected 4 percent target.
"The key rate decision taken by the Bank of Russia is aimed at limiting this risk and maintaining inflation close to 4 percent," the central bank said.
Bankers said they will cut rates even further if economic growth doesn't accelerate faster than expected.
Russian inflation is presently estimated to be around 3 percent.
The cut to 4.5 percent is the lowest level for interest rates since the fall of the Soviet Union in 1991.
The central bank said its move to cut rates was made after noting a steep decline in "domestic and external demand" in the second quarter due to the economic impact of the health crisis.
Inflation, the bank said, is likely to remain lower than desired chiefly due to uncertainty about the virus' course and measures to fight it.
The bank previously expected the pandemic to result in a 4-6 percent for the Russian economy. Some independent analysts, however, say the decline could reach 8 percent.