Russian Central Bank Cuts Key Rate Amid Inflation Concerns

The Russian central bank reduced its key rate by 50 basis points to 16%, as inflation moderates and the Ukraine-focused economy struggles. Despite a slowdown, uncertainties include an anticipated inflation spike in 2026 due to tax hikes. President Putin asserts the bank operates independently and responsibly.

The Russian central bank announced a 50 basis point reduction in its key rate to 16% on Friday. This move aligns with analyst predictions and comes amidst a challenging economic climate significantly influenced by military actions in Ukraine.

According to a bank statement, current price growth metrics have dipped, although inflation expectations have recently risen. Governor Elvira Nabiullina expressed caution, noting that it remains premature to declare a victory over inflation. The bank aims for a 4% inflation target by 2027, despite expected fluctuations in the interim.

President Vladimir Putin praised the bank's autonomous and responsible approach during a press conference, yet noted public skepticism about official inflation figures. Echoing public concerns, questions from citizens highlighted discrepancies between reported inflation and personal economic experiences.

(With inputs from agencies.)