Russia’s central bank on Friday cut its key interest rate to 20 percent — down from a two-decade high of 21 percent — as the economy slows and officials say months of rapid price rises are coming under control.
Russia’s economy has been marked by volatility since it launched its full-scale military offensive on Ukraine in 2022, with growth now slowing after a period of what officials called “overheating”.
The Kremlin has massively ramped up military spending to support the campaign, pouring funds into weapons production and the army — outlays which have helped secure strong growth despite a barrage of Western sanctions.
“The Russian economy is gradually returning to a balanced growth path,” the bank said in a statement, acknowledging the slowdown.
Inflation is still running above 10 percent, though it noted that price “pressures” were “continuing to decline.”
The bank had come under increasing political pressure this year to cut interest rates, which businesses said was throttling the economy and killing investment.
Friday’s decision was the first time the central bank has moved to cut rates since September 2022.
It warned that despite the one percentage-point cut, “monetary policy will remain tight for a long period.”
Russia officially targets inflation of four percent, but does not expect to return to this level until next year.
