Russia’s central bank cut its key interest rate by 25 basis points to 14 percent on Friday, its first rate reduction in months, as policymakers wrestled with competing pressures from businesses demanding cheaper credit and persistent inflation driven by wartime expenditure, the Associated Press and Reuters reported.
Central Bank Governor Elvira Nabiullina announced the quarter-point cut after a board meeting in Moscow, signaling a cautious shift in monetary policy. The bank cited a slight cooling in inflation expectations but warned that risks remain elevated due to government spending on the war in Ukraine and the impact of Western sanctions on trade and logistics.
Russian businesses have been lobbying for lower borrowing costs as high interest rates squeeze corporate profits and consumer demand. However, inflation remains above the central bank’s 4 percent target, fueled by labor shortages, import restrictions, and the cost of military production.
Analysts described the cut as a carefully calibrated move that reflects the Kremlin’s desire to stimulate an economy strained by more than two years of war. Nabiullina has previously resisted political pressure for aggressive rate cuts, insisting the priority must remain price stability.
The Russian economy has shown surprising resilience in the face of sweeping Western sanctions, but growth has come at the cost of overheating in key sectors. The central bank now forecasts inflation will moderate through the second half of the year, though uncertainty remains high.
Friday’s decision comes as Ukrainian drone strikes continue to hit Russian infrastructure, including a series of attacks on the Wildberries online retail network. The strikes have added to the economic strain facing Russian businesses and consumers.
Author: Pulse Of Nations Wire Desk
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