Russia cuts interest rates again, bucking global trend

But in Russia, after a surge in inflation right after the invasion, price rises slowed and the economy did not experience as big a drop as expected from Western sanctions. The central bank more than reversed the 10.5 action point fee increase, to 20%, that it had initiated at the start of the war. In the short period, slowing inflation allowed the financial institution to reduce its charges, but the longer-term outlook for the Russian economy is bleak.

Although business activity did not slow as much last month as the bank had anticipated, “the external framework for the Russian economy remains challenging and continues to significantly weigh on economic activity,” the bank said on Friday. central bank in a statement. Companies are still struggling with manufacturing and logistics amid a sharp drop in imports, with sanctions pushing Russia away from much of the rest of the world.

Buyers saved significantly more, a precaution amid continued uncertainty, central bank governor Elvira Nebiullina said at a Friday afternoon news conference. It is unclear whether or not this sample will continue.

“As we speak, financial savings are a compressed spring in the economic system that can trigger increased consumption under certain circumstances,” she said, much like what happened during the pandemic. , when spending rebounded from pandemic-related shutdowns.

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