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last mo.

Russian Economy on Brink of Recession as Officials Clash Over Interest Rates

Holding rates at 20 percent underscores the central bank’s priority of curbing 9.8 percent inflation despite a 25 percent surge in defense spending deepening economic strain.

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Overview

  • Minister Maxim Reshetnikov warned that based on current business sentiment the economy is on the verge of recession, marking the first public admission of such risk.
  • Finance Minister Anton Siluanov described the slowdown as a normal cooling phase and called for a balanced approach to monetary policy.
  • The Central Bank of Russia has held its key lending rate at 20 percent despite widespread calls from business leaders and some officials to cut rates to as low as 12 percent.
  • Inflation remains elevated at 9.8 percent while a 25 percent increase in defense spending in 2025 has squeezed nonmilitary sectors.
  • The St. Petersburg Economic Forum failed to attract major Western investors and highlighted Moscow’s growing economic isolation against the backdrop of sanctions.