Russia's central bank on June 6 lowered its soaring interest rate from 21% to 20%, indicating easing pressures from inflation.

The decision marks Russia's first rate cut since September 2022.

The central bank decreased rates by 100 basis points, bringing it to 20% from the 21% rate established in October 2024 — the country's highest level since the early 200s. The move follows a drop in inflation, which fell from 10.7% in January to 6.2% in April, according to Russian official data.

"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 in a statement on June 6.

Still, fiscal policy will remain tight "for a long period" as Russia aims to return inflation to its 4% target, the bank said.

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The rate decrease comes amid pressures from politicians to lower rates due to concerns of stagnating economic growth.

Russian Economy Minister Maxim Reshetnikov on June urged the central bank to cut rates in order to boost growth, aiming to achieve a 3% growth target set by Russian President Vladimir Putin.

Elvira Nabiullina, the governor of the Russian central bank, has been hiking borrowing costs in response to skyrocketing inflation. Nabiullina has been credited with keeping the Russian economy afloat as the West imposed massive international sanctions following Moscow's full-scale invasion of Ukraine.

Putin, however, has expressed displeasure with the decline in private investment due to the high cost of credit.

Russia has been forced to slash key projects across various sectors in the face of an economic slowdown, brought on in part by plummeting oil prices. Major Russian exporters have also cut down on rail shipments of metals and oil products, even beyond earlier projected reductions.

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Elvira Nabiullina, the governor of the Russian central bank, is facing government pressure to reduce the high key interest rate imposed amid skyrocketing wartime inflation, Bloomberg reported on June 2, citing undisclosed sources.

The reason is the growing toll on the federal budget and civilian industries, three officials told Bloomberg, with some calling for the decision to be made at the bank's meeting on June 6.

Russia's central bank imposed a 21% key interest rate in October 2024 — the highest level since the early 2000s — to tackle surging inflation, which has dropped to 6.2% this April from 10.7% in January, according to Russian official data.

The high borrowing costs primarily impacted civilian industries unrelated to the Russian military-industrial complex, which has experienced growth amid Russia's record wartime spending, Bloomberg reported.

Nabiullina was seen as a key figure in helping the Russian economy stay afloat as the West imposed massive sanctions due to Moscow's full-scale invasion of Ukraine in 2022.

The bank governor has nevertheless faced backlash over her decision on borrowing costs. In January, Russian President Vladimir Putin voiced displeasure with the decline in private investment due to the high cost of credit.

After some positive signals earlier in 2025 due to U.S. President Donald Trump's outreach to Moscow and hopes for a ceasefire, more recent reports again indicate a sharp slowdown in Russia's economic growth.

Analysts have connected this development to the central bank policies, sanctions, low oil prices, supply difficulties, and high inflation.

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