Russia cuts rates to 14.5% but warns on inflation

Russia’s central bank has reduced its key interest rate to 14.5%, continuing a gradual easing cycle but signaling that inflation risks and economic uncertainty remain firmly in place.

The Bank of Russia said underlying price growth “has not yet decreased,” warning that both external pressures and fiscal uncertainty continue to pose significant challenges for the economy. Policymakers also stressed that future rate decisions will depend on whether inflation and inflation expectations continue to decline in a stable way, News.Az reports, citing Turkish media.

The central bank added that if government spending rises and the structural budget deficit widens, monetary policy would need to remain tighter than currently projected under its baseline scenario—underscoring its cautious stance despite the rate cut.

Recent data shows inflation in Russia easing slightly, falling to 5.77% in April from 5.9% in March. Inflation expectations also dipped to 12.9%, down from 13.4% a month earlier, according to official figures. The central bank expects annual inflation to gradually decline to between 4.5% and 5.5% in 2026.

The decision comes as signs of economic slowdown emerge after a prolonged period of tight monetary policy. Earlier remarks from Russian President Vladimir Putin indicated that gross domestic product fell by 1.8% in the first two months of the year, reflecting weakening activity across parts of the economy.

While the rate cut suggests growing support for economic stimulus, policymakers remain focused on controlling inflation and managing risks tied to government spending and external conditions.

The move highlights a delicate balancing act: supporting a cooling economy without allowing inflationary pressures to resurface.

 
 
 

News.Az 

By Aysel Mammadzada