Russia's Economic 'Hypothermia': A Call for Interest Rate Recalibration

Russia's Economy Minister, Maxim Reshetnikov, warns of 'hypothermia' risks due to high interest rates. With inflation stabilizing, he urges the central bank to reconsider its 21% key interest rate, which has constrained investment. Upcoming rate decisions will be critical as economic growth forecasts remain conservative.

Russia faces the challenge of potential 'economic hypothermia,' according to Economy Minister Maxim Reshetnikov. With forthcoming central bank meetings, there's a call to account for the recent slowdown in inflation, as borrowing costs have stifled investment.

The central bank has maintained a 21% interest rate since October, impacting investment and economic expansion. Despite military expenditure boosting the economy temporarily, high inflation and disagreements on financial policy have created division. Such was evident when President Vladimir Putin's then-adviser criticized monetary policy for weakening the rouble, prompting a rate hike.

In the current economic climate, major exporters like Rusal and Gazpromneft are reducing commodity shipments, reflecting reduced demand. With economic growth predictions cautious, the central bank's next rate-setting meeting on June 6 will be pivotal.

(With inputs from agencies.)