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MOSCOW, March 24 (Xinhua) -- The Russian central bank lowered its key interest rate by 0.25 percentage points to 9.75 percent on Friday, citing lower inflation and economic recovery. "The Board of Directors notes that the inflation slowdown overshoots the forecast. Inflation expectations continue to decline and economic activity recovers," the bank said in a statement. The Russian central bank has lowered its key interest rate by 0.5 percentage points to 10.5 percent in June 2016 in a first reduction since August 2015 and further cut it to 10 percent in September. The central bank said Friday that Russia's year-on-year consumer price growth slowed down to 4.3 percent in the first 20 days of March from 5 percent in January. Russia's inflation hit a record low of 5.4 percent in 2016, sharply recovering from 12.9 percent in 2015. The target set for 2017 is 4 percent. The inflation slowdown was broadly facilitated by the rise of the ruble on higher-than-expected oil prices and the continued interest of foreign investors in Russian assets, the central bank said. Bumper harvests of 2015-2016 have resulted in high stocks of agricultural products, leading to a material slowdown in food, vegetable and fruit prices, it added. The pace of Russia's economic recovery was also quicker than previously expected, the statement said, citing growing industrial output in the first two months of 2017 and a gradual rebound in investment activity. The central bank expected Russia's GDP to grow 1-1.5 percent this year and by 1-2 percent in 2018-2019 "considering the current dynamics of the recovery and higher economy resilience to fluctuations in external economic environment." The Russian economy began to contract in 2014 mainly due to weak oil prices and Western sanctions over Russia's alleged involvement in the Ukraine crisis. Official data showed that Russia's GDP fell by 0.2 percent year-on-year in 2016, compared to a 2.8-percent decline in 2015.|dfg|

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