The Russian Central Bank (RCB) today lowered its key interest rate for the third consecutive month - by one point to 17 percent, amid growing concerns about a slowdown in the country's economy and pressure from businesses for lower interest rates on loans, reported Agence France-Presse, quoted by BTA.
"The economy continues to return to balanced growth. Loan growth has accelerated in recent months," the Bank of Russia said in a statement, specifying that "inflation expectations" remain "high".
The Russian economy is showing signs of slowing after two years of strong growth driven by a sharp increase in military spending since the start of the invasion of Ukraine in February 2022.
This surge in spending has allowed Russia to defy predictions that massive Western sanctions against it would lead to the collapse of its economy, AFP reports.
However, the spending has also led to a sharp rise in inflation, forcing the Russian Central Bank to raise its interest rate to a very high level of 21 percent in October last year.
According to official statistics, inflation in Russia is still above 8 percent, which is double the government's target.
The central bank said today that it would maintain as tight a monetary policy as necessary to return inflation to the target level in 2026 year.
Russian government spending has increased by more than 75 percent since the 2022 offensive in Ukraine.
Senior officials and experts warn that this spending may have exhausted Moscow's ability to stimulate an economy that could slip into recession.
Growth slowed to 1.1 percent annually in the second quarter, down from 4 percent in 2024.
For months, major companies have been calling on the Russian Central Bank to cut interest rates on loans, which they say are hampering the economy and investment amid a labor shortage due to the mobilization of the Ukrainian front and tens of thousands of people who are in exile.
Russian state finances have also been severely tested by low oil prices, which are crucial for financing Russia's economy.
The government recorded a deficit of about $50 billion, or 2 percent of gross domestic product (GDP), in the first eight months of the year, three times higher than in the same period in 2024.
So far, Moscow could use a reserve fund from hydrocarbon revenues to cover this shortfall.
However, this fund is also under test: the value of this immediately available liquidity has halved - from more than $100 billion before the conflict to $48 billion now.
Kiev and Washington are trying to reduce Russia's income from energy exports, AFP notes. Recently, US President Donald Trump increased tariffs on India for buying Russian oil and threatened China with similar measures.
"The economy will continue to grow in 2026, but the more severe the overheating, the more significant the slowdown will be", said RBC Governor Elvira Nabiullina at a press conference today, quoted by TASS.
"Inflation expectations remain high and prices for almost all product categories are not falling", she added, emphasizing that attempts to accelerate economic growth without balancing supply and demand will lead to accelerating inflation.
According to Nabiullina, fuel prices will stabilize, and demand for cars and housing will increase, as she does not expect a new surge in housing prices due to the decrease in mortgage interest rates.
"Of key importance for the accessibility of loans for businesses are low inflation and the reduction of interest rates, which is a slow process," said the RZB governor, adding that retail lending in the Russian Federation increased in August.