Russia’s Economy Cools Amid High Interest Rates and Waning War Spending

Russia’s economy shows signs of cooling too rapidly, according to warnings from the Economy Minister. The Bank of Russia has maintained its key rate at 21% since an emergency hike in October, a MOVE that curbed inflation but stifled investment. The slowdown coincides with fading momentum from heavy wartime expenditures.

Moscow’s economic policymakers typically present a united front, yet recent years have seen open disagreements over high rates, expansive budgets, and strict capital controls. In August 2023, the central bank called an unscheduled meeting to raise rates by 3.5 percentage points after public criticism from President Vladimir Putin’s then-economic adviser, Maxim Oreshkin, who blamed "soft" monetary policy. By March, Putin himself urged officials to avoid freezing the economy "like in a cryotherapy chamber"—a signal many interpreted as a push toward easing.