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Russia central bank slows rate cuts with 14% after war-driven inflation
The bank cut rates by a quarter point to 14% while annual inflation was 5.9% as of July 20, keeping pressure on policymakers targeting 4%.
Russia's central bank made a smaller than usual interest rate cut, lowering its policy rate by a quarter point to 14% as it tries to support stagnating growth while inflation driven by war spending stays above target, the Associated Press reports.
The decision signals a slowing pace of cuts compared with last year, when rates were reduced from a peak of 21% and the bank had been cutting by at least half a percentage point until a quarter-point move on June 19.
AP reports the central bank is balancing pressure from Russia's business lobby about high borrowing costs against its goal of bringing inflation down to 4% annually. High rates can restrain inflation but also raise the cost of borrowing for investment and day-to-day operations.
Annual inflation stood at 5.9% as of July 20, and the bank forecasts 6% to 7% next year, while growth has eased from more than 4% per year in 2023 and 2024 and about 1% last year. The government has forecast 0.4% growth for this year.