Reference News Network September 14 report, according to AFP September 12 report, there is increasing concern that the Russian economy will slow down due to a sharp increase in spending on the offensive in Ukraine. In this context, the Russian Central Bank lowered its benchmark interest rate on Friday, but warned that inflation levels are still too high.
The Russian economy is rapidly cooling down, triggering warnings that the economy may head toward a recession or stagnation. In the previous two years, the economy had experienced strong growth as the Russian government increased military spending to fund its military operations.
Central Bank Governor Elvira Nabiullina said: "We are indeed experiencing a cooling down, which means economic growth is slowing down. This is a natural phenomenon after the economy was overheated." She announced that the lending rate would be reduced from 18% to 17%.
The central bank expects the economy to grow by only 1% in 2025, below the level of over 4% last year.
Since the start of the offensive in Ukraine, the Russian government's spending has surged by more than two-thirds.
Although this move helped Moscow break predictions that Western sanctions would cause its economy to collapse, it led to a surge in inflation.
The central bank is currently gradually lowering the interest rate from a 21% peak, the highest in 20 years.
However, the inflation rate remains above 8%, more than double the government's target. The central bank warned that prices may continue to rise in the coming months. (Translated by Ge Xuele)
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