NextFin news, Russia's central bank cut its key interest rate to 17% on Friday in Moscow, marking the third reduction since June, as the country's wartime economy shows signs of slowing. The decision aims to support economic growth amid ongoing fiscal pressures.
The Bank of Russia stated that inflation remains mostly above 4% year-on-year but has stabilized, with the current annual inflation rate at 8.2%. The bank expects inflation to decline to between 6% and 7% by the end of 2025 and to reach the target range of 4% in 2026.
According to the central bank's statement, credit growth has accelerated in recent months, and the economy is gradually returning to balanced growth. The share of enterprises facing labor shortages has decreased, while wages continue to rise at a pace slower than in 2024 but still outpace labor productivity growth. Unemployment remains at record lows.
The interest rate cut comes as Russia faces increased government spending related to the ongoing conflict, which has contributed to a growing fiscal deficit. The central bank's move to lower borrowing costs is intended to ease financial conditions and stimulate economic activity despite these challenges.
The Bank of Russia emphasized that inflation expectations remain high, and the economic environment continues to be influenced by wartime conditions. The rate cut reflects an effort to balance inflation control with the need to support the economy during a period of geopolitical tension and fiscal strain.
Sources for this report include the Bank of Russia's official statement and coverage by News.az citing CNN, as well as reports from BNN Bloomberg and MSN dated Friday, September 12, 2025.
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