Amid Russian economy warnings, Putin admits Central Bank 'struggling' to cut interest rates
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Lowering the Central Bank's key interest rate too quickly could result in rapid price hikes, Russian President Vladimir Putin said on Sept. 5 at the Eastern Economic Forum in Vladivostok.
The remark follows growing concern among top officials over Russia's economic slowdown.
"I'm sure many people sitting in this room will say 'yes, this is outrageous, it's impossible, the key rate needs to be cut sharply.' But then prices would rise," Putin said. "Price increases are, in a sense, inflation."
"The Central Bank is struggling to combat this inflation and aims to return to desirable indicators."
German Gref, head of Russia's biggest bank, Sberbank, said on Sept. 4 that the country has entered "technical stagnation," warning that the current 18% interest rate must fall closer to 12% to spark recovery.
Russia's annual inflation slowed to 8.8% in July, down from 9.4% in June, though it remains above the Central Bank's 4–5% target range, with the largest price increases seen in food and services.
"In some sectors, the situation is difficult, and those in power understand this perfectly well," Putin said. "But everyone understands that if inflation overwhelms the economy, nothing good will come of it."
A June survey by the independent Russian pollster Levada Center found 58% of Russians listed rising prices as their top concern, while only 33% cited the war against Ukraine.
Putin warned Russians not to rely on "opinions" found on the internet regarding the state of the country's economy. He made the comment in response to a moderator's question about whom citizens should trust when assessing rising prices.
Russian Economy Minister Maxim Reshetnikov said on Sept. 4 that Russia "pays" for inflation and high key interest rate with a "challenging economic situation."
The downturn highlights the limits of Moscow's war-driven expansion, fueled by record defense spending but undermined by shrinking private consumption and weak civilian investment.
