MOSCOW: The Russian central bank said on Wednesday expects its soft monetary policy, coupled with fiscal stimulus by the finance ministry, to help boost inflation and bring it back to its 4% target next year.

Like many countries worldwide since the coronavirus outbreak that has hit consumer demand, Russia is fighting low inflation - a reversal for Moscow after years of trying to bring prices down.

Last month, the central bank slashed its key rate to an all-time low of 4.5%. With inflation now standing at 3.2% and the economy yet to recover from COVID-19, Governor Elvira Nabiullina has hinted that rates could go even lower.

In a report released on Wednesday, shortly before the central bank stops commenting on policy or inflation ahead of its next rate-setting meeting on July 24, it estimated that Russia's second quarter gross domestic product fell by 9.5-10% year-on-year.

"Economic activity is recovering gradually, supporting disinflationary pressure on the economy," the report said. Nabiullina said last month the economy may feel the impact of the central bank's monetary easing in three-six quarters.