Russia lowers interest rates to 20% in first cut since 2022 as inflation pressures ease

Russia’s central bank on Friday cut its sky-high interest rates for the first time since September 2022, in a sign that inflation pressures — not long ago described by President Vladimir Putin as “alarming” — are beginning to ease.

The Bank of Russia took rates down by 100 basis points to 20%. They had been held at 21% since last October, the highest level since the new benchmark rate was introduced in 2013.

The seasonally-adjusted inflation in April was 6.2%, it said, down from an average 8.2% across the first quarter of 2025.

“While domestic demand growth is still outstripping the capabilities to expand the supply of goods and services, the Russian economy is gradually returning to a balanced growth path,” the central bank said Friday, adding that monetary policy would remain tight “for a long period” in order to return inflation to its 4% target.

Russia’s full-scale invasion of Ukraine in February 2022 has put immense strain on prices, with a weaker ruble pushing up import prices, and on an economy it has had to re-orient through subsequent years of war.

Russia’s economy minister Maxim Reshetnikov had urged the central bank to cut rates earlier in the week, as concerns mount about falling output in various sectors. Russian gross domestic product growth rebounded strongly after a period of sharp contraction across 2022 and early 2023, but fell to 1.4% in the first quarter 2025 from 4.5% at the end of last year. Economists meanwhile note that growth has been concentrated in manufacturing, specifically in defense and related industries, and propped up by state spending.

Hopes at the start of the year that U.S. President Donald Trump might be able to push Moscow and Kyiv toward a lasting ceasefire or even a deal to end the war have dwindled quickly, and direct attacks between the countries continue.