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Economists: Russian Economic Woes Deepen, Central Bank May Increase Rate Cuts

Summary: Amid slowing inflation and growing concerns from government and business sectors about the economy entering a recession, the Russian Central Bank has room to further reduce key interest rates. Surveys of economists suggest that policymakers are expected to cut the benchmark rate for the second consecutive time at Friday's meeting. Sixty percent of respondents anticipate ...

Amid slowing inflation and growing concerns from government and business sectors about the economy entering a recession, the Russian Central Bank has room to further reduce key interest rates. Surveys of economists suggest that policymakers are expected to cut the benchmark rate for the second consecutive time at Friday's meeting. Sixty percent of respondents anticipate a 200 basis point cut to 18%, with one analyst expecting a larger cut, and three others predicting cuts between 100-150 basis points. Against the backdrop of ongoing Russia-Ukraine conflict, this rate decision will set the tone for the second half of the year. Central bank officials are struggling to balance inflation risks with worsening economic weakness. Moscow-based Finam investment company economist Olga Belenkaya noted, 'The Russian Central Bank must respond to significantly slowing inflation. Otherwise, rising real interest rates could lead to excessive economic cooling, exacerbating corporate financial pressures.'

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