The Central Bank of Russia has sharply reduced the interest rate due to the risk of recession
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On Friday, July 25, the Central Bank of Russia decided to sharply cut its key policy rate by two percentage points to 18%. About writes The Moscow Times.

The decision was made amid slowing inflation and growing pressure from businesses and officials seeking to avoid an economic recession, writes Bloomberg.

The Central Bank of Russia predicts further rate cuts, depending on economic indicators: "We considered options for a rate cut of 100, 150 and 200 (basis points), but we discussed options 100 and 200 in detail."

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According to the head of the Russian Central Bank, Elvira Nabiullina, if inflation stabilizes and there are no new price shocks, the Central Bank is ready to gradually lower the rate, but so far they are allowing for "the possibility of different steps."

In June, the Central Bank of the Russian Federation had already cut the rate from a record 21% to 20%, for the first time since 2022. However, at the time, the regulator warned that the process of reduction could be suspended if inflation starts to rise again.

Last month, annual inflation in Russia fell to 9.4%, and price growth rates almost approached the 4% target, giving grounds for further monetary policy easing.

At the same time, in June, Russian Economy Minister Maksim Reshetnikov said that the country is on the verge of recession. Consumer demand is falling, housing sales have fallen sharply, the automotive industry is cutting back on production, and businesses are cutting back on investment.

In July, the business climate in Russia returned to the level of 2022, the period of harsh sanctions after the outbreak of a full-scale war in Ukraine.

Earlier, Bloomberg reported that at least three systemic banks in Russia may additional capitalization from the state may be required over the next year in the event of an increase in bad debts.

Ukrainian intelligence also stated that Russia's leading banks have begun preparing for the debt crisis.

At the same time, Nabiullina assures that Russian banks do not need additional capitalization, as their total profit in the first half of 2025 amounted to 1.7 trillion rubles, which is enough to maintain capital adequacy and increase it.