Russia's Rate Cut: A Step Towards Economic Balance

In a move to stabilize the economy, Russia's central bank lowered its key interest rate to 16%. This decision came as inflation is easing, but the economy is still struggling to grow, partly due to the ongoing military actions in Ukraine. The central bank's announcement coincided with President Vladimir Putin's press conference. Putin attributed the economic slowdown to the central bank's efforts to control inflation. He praised the bank's independence, stating that he does not interfere with its decisions. The central bank noted that while inflation is slowing, people's expectations about future price increases have risen. They predict a temporary inflation spike in early 2026, followed by a drop to the target rate of 4% by 2027. However, they warn that geopolitical factors could still cause uncertainty.Many analysts expected this rate cut, but some hoped for a larger reduction. Economists argue that a rate between 12% and 13% would better stimulate economic growth, which is currently at just 1%. During the press conference, Putin shared his predictions for inflation, expecting it to drop to 5. 6% in 2025. However, many Russians seem skeptical. Questions from the public highlighted concerns about rising food prices and stagnant wages. For example, a man from Samara said his salary of 50, 000 rubles is not enough to feed his family of five, noting that poultry prices have doubled this year. Putin acknowledged these concerns, explaining that inflation data reflects averages, and some food prices, like meat, are rising faster than others. He admitted that this puts a strain on family budgets.