Russian Central Bank Governor Elvira Nabiullina speaks during a news conference in Moscow, Russia September 16, 2016. REUTERS/Maxim Zmeyev
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Russia's central bank reduced borrowing costs after a three-month pause and said its key interest rate would probably remain on hold for the rest of the year to keep a lid on prices before easing can resume again.The one-week auction rate was lowered to 10 percent from 10.5 percent, according to a statement on Friday.The Bank of Russia has its reputation on the line as it looks to rein in inflation to 4 percent by the end of 2017 after overshooting its price forecasts in 2015 for a fourth year. Market participants had forecast rates to fall at a faster pace than anticipated by the central bank while their outlook for inflation exceeded the goal, so policy makers had to act to contain expectations, according to Nabiullina.Consumer-price growth eased to 6.9 percent in August from a year earlier, the lowest rate since March 2014 .The central bank worsened its outlook for economic growth next year to less than 1 percent, compared with gains of 1.1 percent to 1.4 percent seen in June. It estimates inflation was at 6.6 percent from a year earlier on Sept. 12, predicting price growth will reach 4.5 percent next September before slowing to the 4 percent target in late 2017 .
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