Central Bank of Russia Cuts Key Rate to 14% Following Putin's Call

The Board of Directors of the Central Bank of Russia has reduced the key interest rate from 14.25% to 14% per annum. This decision was made despite analysts' expectations of a pause amid the fuel crisis and rising budget deficits. Vladimir Putin had previously called for a rate cut, noting that it should be a natural process based on macroeconomic indicators. The Central Bank has also tightened its rhetoric regarding further steps, warning of a slowdown in the pace of policy easing. The main reasons include the consequences of Ukrainian drone attacks on Russian refineries and increased budget expenditures. The inflation forecast has been raised from 4.5-5.5% to 6-7%, while the GDP growth forecast has been lowered from 0.5-1.5% to 0-1%. The economy may not grow this year. Traditional risks have been compounded by the consequences of the fuel crisis, threatening price increases for consumers.