The Central Bank of the Russian Federation announced on June 6 that it has lowered the key interest rate from 21% to 20%. This decision was made against the backdrop of a gradual decline in inflation pressure in the country.
This is reported by Finway
Reasons for the Central Bank’s Policy Change
According to the institution’s statement, inflationary pressure in the Russian economy continues to decrease. At the same time, the Central Bank notes that domestic demand remains higher than the capacity to expand the supply of goods and services. In the regulator’s opinion, this contributes to the gradual return of the Russian economy to a trajectory of balanced growth.
“At the same time, domestic demand continues to outpace the capacity to expand the supply of goods and services, and the Russian economy is gradually returning to a trajectory of balanced growth.”
Reaction to the Decision and Future Prospects
Since July 2023, the key rate in Russia has increased from 7.5% to 21% and has remained at this level since October 2024. The head of the Central Bank, Elvira Nabiullina, warned that if there is a halt in the sustained decline of inflation or an increase in it, a new hike in the key rate may be possible.
Nabiullina has repeatedly faced criticism from major representatives of Russian business. They insisted on the need to ease credit policy, pointing to the risks of stagflation and increased federal budget expenditures. However, the head of the Central Bank explained the refusal to lower the rate by the high inflation risks that threatened the economic stability of Russia.