Live Updates > Live Update Details
2025-09-12 18:47:45
[Russian Central Bank Cuts Interest Rate by 100 Basis Points to 17%, Inflation Concerns Remain!] ⑴ The Russian Central Bank announced on Friday that it would cut its key interest rate by 100 basis points to 17%, lower than analysts expected, primarily due to inflation remaining above target and persistently high inflation expectations. The agency noted, "Inflation expectations have not changed significantly in recent months and remain generally elevated, which could hinder a sustainable slowdown in inflation." ⑵ The market had previously predicted a 200 basis point rate cut, but the ruble's 5% drop this week has raised concerns about the extent of the central bank's cut. The central bank stated that in the medium term, inflation risks remain greater than deflation risks, linked to a prolonged period of deviation from the balanced growth path, elevated inflation expectations, and deteriorating external terms of trade. ⑶ The latest data showed that monthly inflation in Russia was negative 0.4% in August, but the annual rate slowed to 8.14%, down from 8.79% in July. However, the economic growth outlook is bleak, projected to fall from 4.3% in 2024 to 1.2% this year, with some economists and business leaders warning of stagnation or even recession. ⑷ The central bank stressed that the normalization of fiscal policy has not yet been achieved. Given the accumulated budget deficit since the beginning of the year and the possible impact of the new budget, the central bank will be forced to adjust its monetary policy.
