The Russian central bank left its key interest rate unchanged Friday at six percent, aiming to keep inflation in check as the ruble tumbles in the face of an oil price war with Saudi Arabia and the coronavirus outbreak.
"The situation has developed very differently from our forecasts," the Bank of Russia said in a statement, citing the impact of "the spread of the epidemic and a sharp fall in the oil price."
Up to now, the central bank has been easing rates in order to give the oil and gas exporting economy a boost, and it was able to do so as inflation subsided.
But Russia has now been caught in a bind - the oil price has plunged after Moscow and Riyadh fell out over production cuts just as the coronavirus outbreak risks plunging the global economy into recession, sapping energy demand.
Governments and central banks around the world have been slashing interest rates and ploughing hundreds of billions into their economies in an effort to limit the damage.
The Bank of Russia warned that ruble weakness could stoke inflation, if only temporarily because price increases would be eased by the expected global slowdown.
The Russian economy grew a disappointing 1.3 percent in 2019 and the government of President Vladimir Putin had been hoping to do much better this year.