Russia Cuts Rates Again as Economic Pressures Mount

Russia’s central bank has cut interest rates again, most recently from 15% to 14.5%, in an effort to support the slowing economy. The move follows criticism from President Vladimir Putin, who has demanded concrete steps to restore growth.

After a period of wartime expansion, the Russian economy is coming under increasing pressure. Output fell by 1.8% in the first months of the year as the country faces the combined effects of sanctions, heavy war spending in Ukraine and rising inflation, according to the The New York Times.

Although higher oil and commodity prices are providing temporary support, the relief is likely to be short-lived. Inflation remains at 5.9%, and further rate cuts could increase the risk of price pressures.

At the same time, the budget deficit is widening, having already exceeded $60bn in the first quarter. There are also growing social signs of strain, with companies reducing hiring and more people moving into part-time work.

(mja)