MOSCOW: The Russian central bank lowered its key interest rate to 6.00% on Friday and said it may switch to a loose monetary policy stance later this year as inflation has slowed faster than expected.

The central bank downplayed the recent spike in market volatility related to the outbreak of a new coronavirus, cutting the cost on lending for the sixth consecutive meeting.

The 25-basis-point cut was in line with the consensus forecast in a Reuters poll. However, some analysts had expected the central bank to leave rates unchanged amid increased global market volatility and risks of higher state spending under a new Russian government.

Central Bank Governor Elvira Nabiullina, presenting the rate move, said annual inflation was expected to bottom out near 2% in the first quarter and start gradually returning to the 4% target in mid-2020.

"If the situation develops in line with the baseline forecast, the Bank of Russia holds open the prospect of further key rate reduction at its upcoming meetings," the central bank said in a statement.

Nabiullina downplayed concerns that the newly appointed government could increase state spending, which would pose inflationary risks.

"We believe that budget expenditure will be more evenly distributed this year."-Reuters