Putin Has Begun to Pressure the Central Bank of Russia Over Interest Rates — Bloomberg

In recent months, Russian dictator Vladimir Putin has begun to speak openly about monetary policy, which may indicate increasing pressure on the Central Bank of Russia. 

According to the publication, Putin has been increasingly emphasizing the benefits of lower interest rates, effectively signaling to the leadership of the Central Bank of the Russian Federation the desired course of economic policy.

Bloomberg notes that this approach marks a departure from previous practice, when the Kremlin avoided publicly interfering in the Russian regulator’s decisions. Against the backdrop of an economic slowdown and rising war costs, the issue of the key interest rate is becoming increasingly important for the Russian authorities.

Over the course of two weeks in July, he publicly stated twice that lending conditions needed to be eased, after which the regulator, led by Elvira Nabiullina, cut the key rate by 25 basis points to 14%.

According to sources, the decision to lower the rate was a difficult one and was accompanied by heated discussions within the Central Bank. The decision was influenced not only by a direct signal from the Kremlin but also by active complaints from big business and the heads of state-owned banks, who cited the prohibitive cost of borrowing and the threat of mass bankruptcies in the fall. Even Finance Minister Anton Siluanov, who was previously considered a key ally of Nabiullina, joined the calls to lower rates.

At the same time, the regulator’s July move came amid deteriorating macroeconomic indicators. The Bank of Russia updated its forecasts, raising its inflation projection to 6%–7% by year-end and lowering its GDP growth forecast for 2026 to 0%–1%. Policymakers effectively ignored the surge in public inflation expectations, attributing the rise in fuel prices to a temporary factor and assuming that the oil refineries damaged by Ukrainian drones would resume operations by the end of the year.

Experts emphasize that after more than four years of war against Ukraine, the technocratic independence of the Central Bank of the Russian Federation is being eroded. The wartime economy is facing significant strain due to massive military spending and slowing growth, and the next test for Russia’s monetary policy will come during the regulator’s September meeting.

This was reported with reference to Bloomberg.

Putin replaced Russia’s commanders in Ukraine after plans to seize the Donbas fell through.

As a reminder, Russian President Vladimir Putin signed a law imposing strict restrictions on citizens abroad who have been convicted in absentia under political articles of the Russian Criminal or Administrative Codes, including for “discrediting” the army, calls for sanctions, or participation in “undesirable organizations.”