Russia cuts interest rates for the 4th time in 2 months as oil sales ease the pain of sanctions

• Russia's central bank slashed interest rates to 9.5% on Friday, its fourth cut in two months.
• The ruble has strengthened thanks to capital controls and energy exports, clearing the way for cuts.

Russia's central bank has chopped interest rates to 9.5% from 11%, its fourth cut since early April, as the economy slows but oil and gas revenues keep rolling in.

The Central Bank of Russia's decision on Friday takes the key interest rate back to where it stood before President Vladimir Putin ordered the invasion of Ukraine in late February.

Russia's interest rates have been on a wild ride in the last two months. The CBR more than doubled them to 20% shortly after the invasion started, in an effort to stem a plunge in the ruble.

But it has since cut them gradually back down to pre-war levels, including in a move at the end of May that took the key rate to 11% from 14%.

The central bank is grappling with both a sharp slowdown in the economy and a dramatic rise in the ruble. Russia's currency has bounced back sharply since early March, thanks to strict government capital controls.

At the root of the ruble's strength is the continuing flow of oil revenues into Moscow's coffers, analysts say. One of the government's key measures to prop up the currency has been a rule that forces exporters to convert much of their proceeds into rubles.

"The external environment for the Russian economy remains challenging and significantly constrains economic activity," the central bank said in a statement Friday.

"At the same time, inflation is slowing faster and the decline in economic activity is of a smaller magnitude than the Bank of Russia expected in April."

It said inflation would average between 14% and 17% in 2022.

The CBR added that it would "consider the necessity of key rate reduction at its upcoming meetings."