Economists: Russia's economic difficulties worsen, central bank may intensify interest rate cuts

ChainCatcher news, as inflation slows and concerns about the economy falling into recession grow among the government and business circles, the Russian central bank has room to further lower the key interest rate.

A survey of economists by institutions shows that the Russian central bank policymakers are expected to cut the benchmark interest rate for the second consecutive time at Friday's meeting. Among them, 60% of respondents expect a reduction of 200 basis points to 18%, one analyst anticipates a larger cut, and three others predict a reduction between 100 and 150 basis points. Against the backdrop of the ongoing Russia-Ukraine conflict, this interest rate decision will set the tone for policy in the second half of the year. Central bank officials are struggling to balance the contradiction between inflation risks and the worsening economic weakness.

Olga Belenkaya, an economist at Moscow's Finam Investment Company, pointed out: "The Russian central bank must respond to the significant slowdown in inflation. Otherwise, the rise in real interest rates may lead to an excessive cooling of the economy, exacerbating financial pressures on businesses."