In light of the slowdown in growth…the Russian Central Bank reduces the interest rate to 16%

Interest Rate

He added "It will maintain monetary conditions with the stringency necessary to bring inflation back to target" of 4% annually, after reaching 6.6% in November.

Growth in military spending with the launch of the large-scale attack against Ukraine in February 2022 contributed to boosting growth in the first phase, but it also strongly stimulated inflation, which led to an increase in the interest rate and thus made the cost of borrowing prohibitive.

Slowing Inflation

Despite the slowdown in inflation in recent months, the Central Bank still expects GDP growth at a rate ranging between 0.5% and 1% in The year 2025.

Russian President Vladimir Putin said in his annual press conference on Friday: "We must make every effort to ensure that the Russian economy, the macroeconomy, is sound and solid, and that the country’s economy has a strong foundation."

Reducing the budget deficit

The Russian State Statistics Agency estimated "Rostat" Recently, the inflation target of 4% will not be achieved until 2027.

In this context, the Kremlin is seeking to mobilize the help of citizens and companies to reduce the budget deficit, which has approached $50 billion since the beginning of the year.

Putin has agreed in particular to increase the value-added tax from 20 to 22% starting next year.