Latest news with #RussianCentralBank
Reuters
3 days ago
- Business
- Reuters
Russia's July inflation expectations steady at 13%, supporting case for rate cut
MOSCOW, July 17 (Reuters) - Inflation expectations among Russian households for the year ahead, an important gauge closely watched by the central bank, remained steady at 13% in July compared with June, the central bank said on Thursday. The central bank will hold a rate-setting board meeting on July 25 and is widely expected to cut its key interest rate from the current 20% as inflation is slowing down. The latest inflationary expectations data is in favour of a cut. Weekly inflation slowed to 0.02% in the latest week, compared to 0.79% in the previous week, according to statistical data released on July 16, while annualised inflation slowed to 9.34% from 9.45% one week earlier. The central bank expects inflation to slow to between 7% and 8% in 2025 from 9.5% in 2024 and hit the target of 4% in 2026. Inflationary expectations have been falling at the start of the year after the central bank hiked its key rate to 21%, the highest level since the early 2000s, but rose again in April and May.
Reuters
3 days ago
- Business
- Reuters
Russian households' inflation expectations steady at 13% in July
MOSCOW, July 17 (Reuters) - Inflation expectations among Russian households for the year ahead remained steady at 13% in July compared with June, the central bank said on Thursday.
American Military News
06-07-2025
- Business
- American Military News
Russia's War Economy Is Heading To Recession. It Probably Won't Slow Down The War.
This article was originally published by Radio Free Europe/Radio Liberty and is reprinted with permission. At Russia's annual marquee event for business investment, a Kremlin-funded bubbly celebration of promise and opportunity, the country's top economic minister poured cold war on the party. 'According to the numbers, yes, we've got a cooling down now,' Maksim Reshetnikov said at the St. Petersburg International Economic Forum. 'Based on current business sentiment, it seems to me we are on the brink of transitioning into recession.' If that wasn't enough of a damper, the head of the Russian Central Bank seconded the downbeat sentiment. 'We have been growing for two years at a fairly high rate due to the fact that free labor resources were used,' Elvira Nabiullina said during the same panel discussion on June 19. 'But we need to understand that many of these resources have really been exhausted. We need to think about a new model for growth.' And there was also this from German Gref, the head of the state-owned banking giant Sberbank, on the sidelines of the forum: 'We are colliding with a large number of problems, which today we can call a perfect storm.' For more than 40 months now, since the start of the all-out invasion of Ukraine, Russia's economy has been on a war footing, growing at a robust — at times torrid — rate, and showing resilience — unexpected to many Western experts — in the face of punishing sanctions. People walk past an exchange office screen showing the exchange rates of the U.S. dollar to the Russian ruble in St. Petersburg, Russia, in April ALSO: In Russia's War Economy, The Warning Lights Are Blinking The Kremlin has retooled the economy to power its war, pouring money into defense industries to churn out guns, tanks, drones, and uniforms. It's poured money into wages for defense industry workers and paid soldiers sky-high salaries and benefits to entice them to fight in Ukraine. That's transformed local economies in many of the country's poorer, remote regions, and also bought support for the conflict. But high wages have fueled inflation, and Nabiullina hiked the key interest rate to 21 percent in October to try and tamp it down. Despite public complaints from the country's industrial lobby, she has held firm, committed to slowing inflation and downshifting the economy. It's working, and now Russia is facing the first significant economic slowdown since the start of the full-scale war. 'I think a lot of indicators point to growth stopping, or close to it,' said Iikka Korhonen, head of research at the Bank of Finland's Institute for Emerging Economies. 'Manufacturing is still growing, but most other things are not.' 'For two years [the] Russian economy was overheated and growing at a pace way above its normal growth rate,' said Alexander Kolyandr, an economics expert with the Center for European Policy Analysis in Washington. 'So what's happening now is the economy returns to where it should be. For the moment it stands as a correction, coming back to the long-term growth rate.' 'The main challenge for the government at this point is to make this a soft landing, rather than a complete collapse,' he said. With the Russian war effort now in full flow, millions of Russians have been working in factories, manning around-the-clock shifts. (file photo)SEE ALSO:For Some In Russia's Far-Flung Provinces, Ukraine War Is A Ticket To ProsperityWhat Comes Next? Russia's gross domestic product grew by 1.4 percent in the first three months of the year, compared with the same period in 2024, according to government statistics. In the last six months of 2024, however, the economy was humming along — with average growth of around 4.4 percent. Official estimates now forecast GDP growth at around 2 percent in 2025. The International Monetary Fund predicts even lower growth — 1.5 percent. The unemployment rate stands at a historic low of around 2.3 percent, underscoring how distorted the labor market has become as men are drawn away from civilian jobs to fight in Ukraine. Faced with inflation running at over 10 percent in the first half of 2025, Nabiullina has warned repeatedly about an 'overheated economy.' In early June, she engineered a small rate cut, to 20 percent, which experts called largely symbolic. But the impact of the high interest rate is showing up in official statistics, according to data and forecasts from the Center for Macroeconomic Analysis and Short-Term Forecasting, a government-linked research group. For some in the Kremlin, a soft landing would be a welcome correction to the two torrid previous years. The danger is if it becomes a hard landing. 'By keeping the key rate very high, despite the state continuously pumping money into the economy, they have been able to achieve economic slowdown,' said Maria Snegovaya, a senior fellow in the Russia program at the Washington-based Center for Strategic and International Studies. The Kremlin has sought to avoid any mass mobilization of Russian men to fight in Ukraine. A September 2022 order for a partial mobilization was widely ALSO: More War, Less Money: What A Cut In Signing Bonuses May Reveal About Russia's Fight In Ukraine 'It's unclear how sustainable the situation is for the Kremlin if the economy is actually declining. It's not something that they want either,' she said during an online discussion on June 17. 'In general, the Russian macroeconomic team seems to be quite concerned.' What this means politically is harder to predict. So far, President Vladimir Putin has given Nabiullina and other top economic officials his blessing for their handling of the economy. A day after the panel discussion at the St. Petersburg forum, Putin weighed in himself, with a cautionary note in a speech at the business forum: 'Some specialists, experts, point to the risks of stagnation and even recession,' he said. 'Of course, this should not be allowed under any circumstances.' 'Our most important task this year is to transition the economy to balanced growth,' Putin said. President Vladimir Putin applauds during a plenary session of the St. Petersburg International Economic Forum on June Vladimir Putin applauds during a plenary session of the St. Petersburg International Economic Forum on June 20. With other parts of the economy crimped by sanctions, Kremlin coffers are even more heavily dependent on oil and gas revenues than they have been in the past. But oil prices have fallen since the beginning of the year, and the Finance Ministry has lowered its forecast for oil-linked revenues for 2025. 'Unless we see a decline in oil prices, [or] some significant increase in sanctions enforcement, and an overall decline in civilian production, then I think there will be a soft landing,' Kolyandr said. Balanced — or slower — growth will ripple through the economy, putting a brake on wage growth. It will also crimp household budgets at a time when Russians have been accustomed to fatter wallets, which could fuel discontent. A growing number of companies and factories are also falling behind in wage and salary payments to workers, according to the newspaper Nezavisimaya Gazeta. And a growing number of regions have started cutting recruitment bonuses for new volunteer soldiers — a trend that reflects worsening economic conditions on a local level. Still, Putin seems determined to push forward in the war — even faced with eyewatering casualty rates that are approaching 1 million men killed or wounded. The government plans on spending about 13.1 trillion rubles ($144 billion) on defense- and security-related expenditures in 2025. That's 6.3 percent of its GDP, one of the highest levels since the Soviet era. 'Unfortunately, yes, this war will not stop for economic reasons, and Russia can continue to produce [weaponry] at the current level for quite a while,' Korhonen said. 'The only economic factor that could really hamper Russia's war effort is the price of oil.'
Yahoo
24-06-2025
- Business
- Yahoo
Strong rouble eats into Russia's oil profits despite rising global prices
Oil prices are rising, but Russia is not profiting from this as expected: the Kremlin's revenues remain under pressure as the rouble strengthens. Source: Bloomberg Details: On 13 June, Urals oil rose to over $60 per barrel, almost regaining its losses since the start of the year. Bloomberg estimates, however, that the real income earned by Russian exporters was RUB 4,957 (US$63) per barrel, almost 30% lower than at the beginning of 2025. The reason for the plunge in revenue is the strengthening of the rouble, which has climbed almost 23% to 78.72 to the dollar. This is due to a combination of factors: the high key rate set by the Russian Central Bank and the anticipation of a "thaw" in relations with the United States. As a result, the situation remains challenging for the Kremlin. Oil and gas revenues account for up to a third of the budget, and most expenditure is made in roubles. Although some losses are offset by government subsidies, export profitability is declining. "A strong currency makes life more difficult for the industry," said Russian Deputy Prime Minister Alexander Novak. Igor Sechin, CEO of Rosneft, Russia's biggest oil producer and exporter, has accused the Central Bank of "understating the value of oil in roubles". Analysts at Freedom Finance Global believe that a return to a weak rouble is unlikely while commodity prices and interest rates remain high. Only a fall in global oil prices and a surge in inflation could change the current trajectory. Background: Russia has been unable to take advantage of the recent rise in oil prices and the increase in its own OPEC+ quota as export volumes fell to their lowest level in seven weeks. In May 2025, Russia's export revenues from the sale of hydrocarbons abroad fell to their lowest level since the start of the full-scale war against Ukraine. Support Ukrainska Pravda on Patreon! Sign in to access your portfolio
Daily Mirror
21-06-2025
- Business
- Daily Mirror
Vladimir Putin given stark 'on the verge' warning by top minister
Russia's economy could be 'on the verge' of a recession, according to one of the top officials in Vladimir Putin's Kremlin - Russia's economy remains on a war footing Vladimir Putin received a stark warning from one of his own ministers as Russia's economy remains on a war footing. The Russian Economy Minister Maxim Reshetnikov said that Russia 's economy is 'on the verge' of transitioning to a recession. 'We have a cooling stage,' Reshetnikov said at the St. Petersburg International Economic Forum, calling the numbers bedding his comments like looking at a 'rearview mirror'. He said: 'According to current business perceptions, we are already, it seems, on the verge of a transition to a recession.' Reshetnikov said that a recession was not inevitable and would depend on decisions taken by the Kremlin. Putin, in a speech at the forum, mentioned the recession warnings but emphasised that 'it mustn't be allowed'. Putin said Russia has managed to curb inflation and ease its reliance on energy exports. He pointed out that manufacturing industries have posted steady growth, allowing the country to reduce its reliance on oil and gas exports. 'The perception of Russian economy as based on raw materials and dependent on hydrocarbons exports have clearly become outdated,' Putin said, adding that the economy grew by 1.5 percent in the first four months of 2025 and inflation has dropped from double digits to 9.6 percent. Putin has used the annual forum to highlight Russia's economic prowess and encourage foreign investment, but Western executives have shunned it after Moscow sent troops into Ukraine in 2022, leaving it to business leaders from Asia, Africa and Latin America. The economy, hit with a slew of Western sanctions, has so far outperformed predictions. High defence spending has propelled growth and kept unemployment low despite fuelling inflation. Large recruiting bonuses for military enlistees and death benefits for those killed in Ukraine also have put more income into the country's poorer regions. But over the long term, inflation and a lack of foreign investments pose threats to the economy. Economists have warned of mounting pressure on the economy and the likelihood it would stagnate due to lack of investment in sectors other than the military. Putin said the growth of military industries helped develop new technologies that have become available to the civilian sector. He vowed to continue military modernisation, relying on lessons learned during the fighting in Ukraine. 'We will raise the capability of the Russian armed forces, modernize military infrastructure and equip the troops with cutting-edge equipment,' Putin said. But Russian Central Bank Governor Elvira Nabiullina said that the factors that had helped Russia with sustained growth could no longer be relied upon. On June 19, The Moscow Times said that Nabiullina said Russia had been growing on the back of 'free resources'. This includes its bank reserves, liquid assets in the country's wealth fund, industry and labour. Such resources are now reaching their limit, Nabiullina said. 'We grew for two years at a fairly high pace because free resources were activated," she said. "We need to understand that many of those resources have truly been exhausted."
