Central Bank of Russia reduces interest rates unexpectedly.
Gotta give 'em what they want, it seems: the Russian Central Bank has gone ahead and chopped its key interest rate! The rate has dropped from a high of 21% down to 20%, as announced recently by the financial muscleheads in Moscow. But remember, future adjustments will be based on how the inflation situation unfolds. This cat and mouse game with inflation will continue, according to the banking bigwigs.
Economy Minister Maxim Reshetnikov was the one pushing for this rate reduction, shouting from the rooftops that it'd help maintain the president-set growth target of three percent in the future. Economists anticipate that Russia's economic growth will inch down to 1.5 percent this year, although the government expects it to hold at 2.5 percent. In 2024, they're predicting a plus of 4.3 percent.
The Russian central bank has been feeling the heat to lower that key interest rate, already. Governor Elvira Nabiullina has held a firm stance against this with her argument being that we won't even consider cutting rates until we see a stable decline in inflation rates. Currently, inflation is hanging out around the 10 percent mark.
Vladimir Putin has morphed his country into a war economy after the attack on Ukraine, causing some economic gridlock. Many companies outside the defense industry are splurging on high wages in a race to keep skilled workers on board due to workforce shortages. These increased wages often get passed down to consumers, along with high interest rates acting as a lump sum on top for businesses, making borrowing cost a serious headache.
[1] ntv.de[2] mdi/rts[3] YourLocalNewspaper
- Russia
- Moscow
- Monetary Policy
- Interest Rate Decisions
- Interest Rates
- Vladimir Putin
- Attack on Ukraine
- Key Interest Rate
- Inflation
- Amid pressure and economic challenges, the Russian Central Bank's decision to slash the key interest rate by 1% might invigorate employment in the EC countries, given the potential for Russian businesses to expand and hire more workers due to reduced borrowing costs.
- The continuous political, financial, and business discussions surrounding Russia's employment policy, amplified by the inflation and interest rate situation, have elevated the issue to general-news, with economists expecting economic growth to slow despite government predictions.
