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Investing.com -- The Russian central bank has lowered its key interest rate from 21% to 20% on Friday, citing a slowdown in economic growth and a decrease in inflation rates. The bank stated that inflationary pressures, including underlying ones, are continuing to decline. Despite domestic demand growth exceeding the ability to increase the supply of goods and services, the Russian economy is gradually returning to a balanced growth path.
This shift resulted in a drop in Russia’s economic growth rate to 1.5% year-on-year in the first four months of 2025, compared to 4.3% in the previous year. This decline has led to severe criticism of central bank governor Elvira Nabiullina.
Since the start of the year, consumer prices have increased by 3.39%, a slight decrease compared to the same period last year when prices rose by 3.88%. The annualized inflation rate dropped below 10% in May, following a peak of 10.34% in March.
The central bank predicts inflation rates to be between 7% and 8% for this year, with economic growth expected to be between 1% and 2%. The Economy Ministry, however, has a more optimistic outlook, forecasting a growth of 2.5%.
The rouble’s rise in value, which has seen a 40% increase against the dollar since the start of the year, has assisted the central bank in its fight against inflation by reducing the cost of imported goods.
The central bank stated that the stringent monetary policy has had a particularly strong impact on the decrease in prices for non-food goods, a trend that’s been bolstered by the appreciation of the rouble.
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