Its central bank Russia reduced its basic interest rate Today (25.7.2025) by 200 basis points at 18%, hoping to rejuvenate lending and boost hypotonic economic growth, as persistently high inflation has shown signs of retreat.
This is the largest decline since May 2022, when the central bank reduced its interest rate by 300 basis points as the economy recovers the shock of western sanctions imposed after the start of Russia’s military action in Ukraine.
The latest decline was in accordance with a poll by Reuters in which 27 economists were asked, and after complaints made by Russian businessmen and some government officials that high interest rates are strangling the economy.
The Central Bank has significantly increased interest rates since July 2023 to address the impact of an economy overheating caused by the increase in military spending. Russia’s finance minister had stated last month that the country as a result of this overheating is on the brink of recession.
Along with the sharp decline in interest rates, the Central Bank also reduced its prediction of inflation in level between 6% and 7% from 7% and 8%, saying that inflationary pressures were decreasing faster than previously predicted.
The Central Bank says it will maintain monetary conditions as strict as it is, necessary to restore inflation to its 4% target in 2026.
“We are on the road to reinstating inflation to the target, but this course has not yet been completed,” Central Bank Governor Elvira Nabiulina said at a press conference following the interest rates. “Returning to the goal … It implies a steady establishment of inflation at a low level not only in the real facts but also in the perception of people and businesses,” he said.