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Russia Signals Slower Rate Cuts Amid High Ukraine War Spending

On Friday, the Central Bank cut its benchmark interest rate to 14.25% from 14.5%, signaling a cautious approach to monetary easing as the Ukraine war strains Moscow's finances.
Russia's budget deficit widened to nearly $80 billion in the first five months of this year, driven by military spending on the Ukraine war and exceeding 2026 plans by 60%.
Analysts on average expected a larger cut to 14%, according to RBC, while the Russian business lobby urged the regulator yesterday to lower the rate to 13.5% to avoid the economy "freeze."
The Central Bank noted "Economic growth continues at a moderate pace after a temporary decline at the beginning of the year," yet warned structural budget deficits until 2029 may require tighter monetary policy.
Earlier this month in Saint Petersburg, President Vladimir Putin denied the economy had "collapsed," asserting it "descended to the same level" as other nations, despite the Russian economy contracting for the first time in three years.

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