Russia lowers growth forecast to below 3.0%

Russia’s economy ministry downgraded the annual growth forecast to less than 3.0 percent from 3.6 percent amid growing signs that the central bank is being primed to lower its key interest rate for the first time in six months.

Deputy Economy Minister Andrei Klepach told a government meeting that “extrapolating from current figures, we will not be able to make three percent.”

“For now, we are progressing substantially bellow the forecast” of 3.6 percent, he said in televised remarks.

Russia’s economic slowdown has alarmed some top officials who have urged the central bank to act by cutting lending rates.

The Russian economy expanded by 3.5 percent last year and President Vladimir Putin had set out a higher target amid indications that Europe was beginning to slowly recover from its latest financial crisis.

But the central bank’s board of directors has watched inflation surpass its own forecasts and has been hesitant to act.

The latest report this week showed consumer prices rising by 7.2 percent on a 12-month basis — a slowdown from earlier indicators.

The government’s warning about poor growth and moderating inflation has prompted several economists to predict a cut of 0.25 percent to the current main interest rate of 8.25 percent at the central bank’s next session on Tuesday.

“February’s very disappointing 0.1. year-on-year GDP growth, which became known after the last central bank meeting, has resulted in increased pressure to support economic growth,” Alfa Bank economist Natalia Orlova said.

VTB Capital agreed “that the easing will be started as early as in April for quite a long time.”