Trump wants but Putin gets it! Russian central bank cuts key interest rate by a full percentage point

Russian central bank cut its key interest rate by a full percentage point to 20 per cent on Friday, a surprise move by the bank which it justified by pointing to declining inflation pressure and a more robust Rouble. This comes as President Donald Trump reiterated on Friday that the US Federal Reserve should cut interest rates by a full percentage point.

It was the first easing since September 2022 by the Russian Central Bank, which has faced pressure from business leaders and top government officials to begin cutting rates. In a statement, the bank said economic growth was cooling down and inflation was slowing.

"Current inflationary pressures, including underlying ones, continue to decline. While domestic demand growth is still outstripping the capabilities to expand the supply of goods and services, the Russian economy is gradually returning to a balanced growth path," it said.


At a press conference following the decision Governor Elvira Nabiullina dismissed a suggestion that the regulator had given in to political pressure to reduce rates.

Nabiullina did not rule out future rate hikes if inflation begins to rise again. She said the board considered options for a half and a full percentage point cut at the meeting.

Russia's economic growth rate fell to 1.5 per cent year-on-year in the first four months of 2025, compared to 4.3 per cent last year, prompting sharp criticism of Nabiullina.

Despite the cut, the inflation backdrop remains in focus.

Expectations among households, an important gauge monitored by the central bank, rose for a second month in a row in May which some analysts linked to a planned mid-year nationwide increase in payments for electricity, gas, water, and communal services.

Food inflation, with prices for staples like potatoes tripling since last year due to a poor harvest, has severely affected Russia's poor. The central bank said in its statement that food inflation remained high.

FAQs

Q1. Who is President of Russia?
A1. President of Russia is Vladimir Putin.

Q2. Who is President of USA?
A2. President of USA is Donald Trump.