The Central Bank in Russia has reduced interest rates for the first time since 2022

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The Russian Central Bank reduced its main interest in a full percentage on Friday to 20 percent, its first reduction since 2022, as the war economy in Vladimir Putin cools.

“The local demand continues to exceed the economy’s ability to expand the scope of supply of goods and services, but Russia is gradually returning to a more balanced growth path,” CBR said in its statement.

This step, which was expected by the majority of economists included in Bloomberg, comes after a decrease in inflation and emphasizes the end of the increase in GDP for two years, and is nourished by spending in wartime.

Many economists told the Financial Times that the decrease in annual inflation to 9.8 percent in June after it spanned months of growth of a double number of numbers.

“CBR explained that his main concentration is the steady decline in inflation,” said Olga Bilinkaya, head of the Moscow -based FG Finam, before announcing Friday.

However, the bank confirmed Friday’s reduction on a rapid price reduction, adding that it will “maintain narrow cash conditions as necessary” to re -inflation to its 4 percent goal in 2026.

CBR noticed that although inflationary risks decreased slightly, it still exceeds the forces that will lead to cooling the prices of consumers in the medium term.

Janice Klog, an expert in Russian economy with the German Institute for International and Security Affairs, said that the bank found itself in a “very difficult spot.” He added that inflation is abandoned, but its strength is unconfirmed, as the prices of other than food decreased, but the costs of food are still rising and reaching its most difficult poorer.

Since the summer of 2023, the Russian economy has been increasing, and it was nourished by the spending -related spending. The CBR Elvira Nabiullina ruler was previously similar to the “race at full speed”, and he warned that he “could go quickly, but not for a long time.”

To curb the inflation, which increased cumulating about 35 percent since the war began widely against Ukraine, CBR has kept 21 % interest rates since October last year.

However, the high borrowing costs have been weighed upon request from both companies and consumers. “The retail lending mainly, and the growth of corporate lending became small-but this was the birth control pill that must be taken,” said Oleg Cosmin, the chief economist in the Renaissance leader in Moscow.

Now, the challenge is the cooling economy. President Vladimir Putin warned in March: “It is inevitable, but we must act carefully to avoid excessive cooling, as in Cryochaamber.”

In the first quarter of 2025, Russia’s gross domestic product grew only 1.4 percent, according to the Main Statistics Agency in Russia, Rosstat, a significant decrease from 4 percent in the previous two years. The average growth was seasonal to a quarter to a quarter, for the first time since 2022.