Russia’s Central Bank cut its key interest rate to 20% from a two-decade high of 21%, citing easing inflationary pressures and signs of an economic slowdown. This marks the bank’s first rate cut since September 2022. The move comes amid growing pressure to ease borrowing costs, which businesses claim are stifling investment and growth.
The Kremlin has increased military spending, driving economic growth through defense production and outlays. However, Western sanctions have had a significant impact on other sectors. Inflation remains above 10%, but “price pressures” continue to decline, according to the Central Bank.
Policymakers aim for 4% inflation but do not expect to reach this target until 2026. The bank’s statement highlighted that monetary policy will remain “tight for a long period.” Despite these challenges, the Russian economy is seen as gradually returning to balanced growth, albeit with caution.
Source: https://www.themoscowtimes.com/2025/06/06/russias-central-bank-cuts-key-rate-from-historic-high-as-economy-slows-a89366