Lesser decrease in interest rate She chose her bank Russia As expected, despite calls for more aggressive monetary relaxation, as the economy slows down faster than forecasts and growth is in danger of receiving the official targets this year.
Specifically, policy makers reduced the cost of borrowing by one percentage point to 17% on Friday (12.9.25), defying the average expectation of a two -point reduction in Bloomberg survey among economists. One of the nine respondents had foreseen her decision. Bank of Russia, while another saw the main interest rate remain unchanged.
“The basic measures of current price rise have not changed significantly. The Bank of Russia will keep monetary conditions as strict as they are needed to restore inflation to the target in 2026, “the Central Bank said in a statement.
Governor Elvira Nabilina will be briefed at 3 pm Moscow time.
The Central Bank began to reduce the basic interest rate from a 21% record just in June, when the seasonally adjusted monthly price increase approached 4%, despite the fact that businesses had been sounding the alarm for high borrowing costs since late last year.
Bank of Russia reduces the monetary policy relaxation rate by half
In the meantime, the economy slows down sharply. The growth of the first seven months of 2025 was close to the lower limit of the forecast 1% -2% of the central bank for the year. Economists have warned that the outcome for the whole year may be lacking in this range. Industrial production increased by just 0.7% in July, from 2% in June and about half of the rhythm expected by economists.
Officials remain divided into the seriousness of the situation. Economy Minister Maxim Resetnikov reiterated analysts’ concerns that the slowdown is more intense than expected. Herman Gref, head of Russia’s largest bank Sberbank, described the situation as “technical stagnation” and said the economic recovery would require the interest rate to be 12% or lower by the end of the year.
At the same time, Andrei Costin, chief executive of the country’s second largest bank, VTB, said last week that he does not see a “significant deterioration in the economy in the last quarter” and no threat to the horizon, according to the state -run news agency Tass.
For the rest of the year, companies should face the cost of borrowing that remains relatively high and the weaker demand, said Oleg Kuzmin, an economist at Renaissance Capital.
Inflation deceleration paves the way for more cuts
While the slowdown in prices have reinforced the case for yet another interest rates, challenges for continuing relaxation remain, including increased expectations for inflation, the domestic fuel crisis that has pushed the prices of gasoline upwards and weakening.
“The risks in favor of inflation continue to override the default risks in the medium -term horizon,” the Central Bank said on Friday, citing high expectations for inflation as well as the deterioration of foreign trade conditions.
The budgetary risks – including whether the government will increase the expenditure and deficit targets this year – will also affect the way in view of those responsible for interest rates on further cuts. The Central Bank has repeatedly warned that the relaxed fiscal policy could add inflationary pressures, while the fall in oil prices has already derailed the Moscow plan to begin a decline in deficit caused by the war in 2025 and its 67% of the 67%.
The Bank of Russia has scheduled its next meeting on interest rates on October 24.