Russia's central bank slashes interest rates to below pre-invasion levels as oil and gas exports ease severity of its recession

• Russia's central bank slashed interest rates to 8% from 9.5% on Friday, setting them below pre-Ukraine war levels.
• Western sanctions have cratered Russia's economy, but oil and gas sales have lessened the severity of its recession.

Russia's central bank cut interest rates to 8% from 9.5% Friday — putting them below pre-Ukraine invasion levels — as oil and gas sales help the economy avoid a deeper recession.

It was the fifth straight interest rate cut, and policymakers said more could follow in the second half of the year.

Higher energy prices have helped prop up Russia's economy even as it grows increasingly isolated in global financial markets. Moscow has found alternative buyers of its oil, especially in Asia, while Europe continues to rely on its natural gas.

The central bank predicted that the Russian economy will contract between 4% and 6% this year, down from its earlier forecast for a decline of 8% to 10%. But next year isn't expected to see much improvement, with GDP seen shrinking as much as 4% in 2023.

"The external environment for the Russian economy remains challenging," Russia's central bank said in a statement. It added that policy moves in April through July "will increase the availability of credit resources in the economy and limit the decline in economic activity."

The central bank lowered its inflation forecast as well, and now expects it to land between 12% to 15%, down from 18% to 23%. In June, Russia saw its annual inflation rate hit 15.9%.