Russia’s central bank (Bank of Russia) has lowered its main interest rate by 18% on Friday. This is the biggest cut in three years. The bank did this because the country’s economy, which had been growing fast due to the war, is now slowing down. Also, inflation (the rise in prices) is starting to cool.
This rate cut is the second time this year the bank has lowered rates. Last year, the bank had raised interest rates to a very high 21% to try to control inflation. But now, they decided to ease up a bit because inflation is going down and businesses and people are borrowing and spending less.
The economy grew quickly for two years because of big military spending. But now, that boost is ending. Factories and military orders are not growing as much as before, and people are buying less. Inflation dropped to 9.4% in June, the lowest in seven months. The bank hopes inflation will be 6-7% by the end of this year and return to 4% in 2026.
Business leaders and government officials had asked the bank to lower rates because high rates made it hard to borrow money and invest. If rates stay high for too long, businesses can have money problems.
However, the bank said it will be careful. If rates are cut too fast or too much, inflation might rise again, especially if the government spends more money suddenly. After the announcement, the Russian ruble (currency) and the stock market stayed stable.
The bank’s next meeting to decide on rates will be in September. Experts have different opinions. Some think rates will be cut more if inflation keeps falling and the economy stays weak. But the bank says it will keep policy “tight” until inflation is under control.
Right now, Russian leaders are trying to find a balance. They want to help the economy grow and make it easier for people and companies to get loans without causing prices to rise too fast or harming the country’s money system. This is a tough challenge as the strong growth from war-related spending is now fading.