Putin Dismisses Top Bankers’ Warnings Over Russia’s Stagnating Economy

Russian President Vladimir Putin brushes off dire economic warnings from the nation's top financial minds—choosing bullish optimism over banker pessimism.

Defying Economic Gravity

Putin sidesteps concerns about fiscal stagnation, dismissing caution from leading financiers. Ignores traditional indicators in favor of political narrative.

Power vs Pragmatism

The Kremlin doubles down on economic sovereignty rhetoric while bankers sweat over real numbers. Classic case of political will trumping financial reality—because who needs balance sheets when you have geopolitical ambitions?

Another day, another leader betting against market fundamentals. Some things never change—especially in economies run like personal fiefdoms.

Interest rates clock highs, but inflation is steady

Gref, who leads Russia’s largest lender, asked policymakers to slash borrowing costs, arguing that high interest rates were suffocating businesses and households. 

“Given the current level of inflation, recovery can only be expected when the rate is at 12% or lower,” he asserted. Sberbank’s internal forecasts predicted the benchmark rate would average around 14% by the end of the year, which, according to the banker, is still too high for businesses to grow.

Last September, the Russian central bank raised its key rate to 21%, the highest in two decades, as inflation accelerated on the back of war spending and supply shortages. Per Trading Economics data, Russia’s annual inflation eased to 8.8% from 9.4% in June, the lowest level since October 2024.

While policymakers have since reduced borrowing rates to 18%, they are more reluctant to make steeper cuts. Officials say military expenditures and state spending are threatening to bump inflation up.

Putin supports Bank of Russia decisions, but ministers are doubtful

Putin has stood behind Central Bank Governor Elvira Nabiullina despite the discontent of several industrialists and politicians. The Kremlin sees inflation as riskier than stagnation, with the president warning economists that unchecked price growth would harm ordinary Russians more severely than slower output.

“Some believe that hypothermia has already come, but lending has not stopped,” Putin said on Friday. “The pace has slowed down, I know, in some industries, the situation is not easy,” he added

Members of his cabinet, like Economic Development Minister Maxim Reshetnikov are saying the economy was “cooling down faster than expected,” which could mean revised forecasts would be submitted soon.

Finance Minister Anton Siluanov told Putin last week that next year’s growth projections had been cut to 1.5% from 2.5%, with some internal estimates closer to 1.2%. And according to independent analysts looking at the data, the Kremlin is running out of room to maneuver. 

Fighting for oil revenues inside the war

Politico reported this week that Ukrainian drone strikes have been targeting Russian oil storage and pumping facilities, causing domestic shortages and undermining output. The barrage of attacks has compounded the impact of falling global crude prices, leaving Moscow’s most important industry under siege.

“For the Kremlin, a brief period of low growth is tolerable, though combined with lower oil prices, it would reduce fiscal revenues,” Kolyandr continued, “On the other hand, if the government doesn’t reduce fiscal support, there’s a risk high inflation will return.”

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