Economist: Russia's economic difficulties intensify, central bank may increase interest rate cuts

According to a report by Golden Finance, as inflation slows down and concerns from the government and business community about an economic recession intensify, the Russian central bank has the operational space to further lower key interest rates. According to a survey of economists by institutions, it is expected that Russian central bank policymakers will lower benchmark interest rates for the second consecutive time at their meeting on Friday. Among them, 60% of the respondents expect to cut interest rates by 200 basis points to 18%, one analyst expects a larger rate cut, and three others predict a decrease between 100-150 basis points. In the context of the continuation of the Russia-Ukraine conflict, the interest rate resolution will set the tone for the policy in the second half of the year. Central bank officials are struggling to balance the contradiction between inflation risks and worsening economic weakness. Moscow Finam Investment Company economist Olga Belenkaya pointed out that "the Russian central bank must respond to a significant slowdown in inflation. Otherwise, an increase in real interest rates may lead to excessive economic cooling and exacerbate financial pressure on businesses.