Russia’s Central Bank Eyes More Aggressive Easing as Economic Slowdown Accelerates

Moscow's monetary policymakers pivot hard—rate cuts incoming as growth sputters.

Aggressive Easing on the Horizon

The Central Bank of Russia isn't just tapping the brakes—it's slamming the accelerator. With economic indicators flashing warning signs, officials signal deeper rate cuts to juice an economy that's losing steam faster than expected. Traditional finance moves at glacial speed while digital assets operate in real-time—another reminder why legacy systems play catch-up.

Timing the Stimulus

They're not waiting around. The slowdown's pace forced their hand, pushing for more substantial intervention than previously telegraphed. Watch for coordinated moves—liquidity injections paired with policy rate adjustments. Because when traditional economies wobble, smart money already diversified into assets that don't need central bank permission to appreciate.

Because nothing says 'stable economy' like emergency rate cuts while bitcoin quietly notches another ATH.

Business slowdown, weak demand pressure policymakers

Companies have been pushing for cheaper financing for months, with many struggling under high interest rates since the end of 2024. But the Bank of Russia didn’t react until June, when inflation (adjusted for seasonal trends) hit nearly 4%.

Now, those numbers are dropping. Inflation slowed to around 2% in July, once regulated utility tariffs were stripped out. “Inflationary pressure has significantly decreased,” the central bank said earlier this month. That change opened the door to bigger cuts.

Oleg Kouzmin, chief economist at Renaissance Capital, said the downturn in business activity has gotten worse since the last rate meeting.

“Signs of a noticeable slowdown in business activity, which have clearly intensified since the last meeting, are the main argument for a 200 basis-point cut,” Kouzmin said, adding that corporate results have broadly deteriorated.

Still, there’s no consensus inside Russia’s leadership about how bad things really are. Economy Minister Maxim Reshetnikov agrees with analysts warning that the slowdown is sharper than predicted. But the Bank of Russia still claims the economy is “overheated,” just less than it was earlier this year.

The country’s top lenders also don’t agree on the scale of the damage. Herman Gref, who runs Sberbank, Russia’s largest bank, described the current environment as “technical stagnation” and warned the central bank against letting it slip into a full recession.

On the other hand, Andrey Kostin, CEO of VTB, said he doesn’t see any “significant deterioration in the economy over the past quarter,” and that there are no serious risks visible right now.

Spending, deficit, and inflation expectations complicate the path forward

The upcoming rate decision is set for 1:30 p.m. Moscow time on Friday, followed by a briefing from Governor Elvira Nabiullina at 3 p.m. But even if inflation keeps slowing, the bank still has other problems to watch.

Gasoline prices are rising again thanks to a domestic fuel shortage, and the ruble is under pressure. At the same time, inflation expectations remain high, which makes the bank more cautious about cutting too aggressively.

Budget concerns also play a major role. The bank has repeatedly warned that if the government chooses to increase spending or raise deficit targets, it could make inflation worse. And that possibility is very real, given how far off the fiscal targets already are.

Oil revenue is falling, which is a problem. Moscow had planned to begin reducing its war-driven deficit in 2025, but that’s now unlikely. The Finance Ministry says spending reached 67% of the annual plan by the end of August.

The deficit has already hit 1.9% of GDP, or 4.2 trillion rubles, nearly $50 billion. That’s higher than the 1.7% full-year goal, and it’s adding pressure on rate-setters trying to balance growth and inflation.

With growth now falling behind its targets and political pressure increasing, all signs point to another DEEP cut on Friday. Whether that’s enough to calm businesses, fix weak demand, and hold the ruble remains to be seen.

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