Rate cut eases pressure on Russian budget – Manturov

Lowering Russia’s key interest rate by one percentage point could save the federal budget around 260 billion rubles ($3.3 billion), First Deputy Prime Minister Denis Manturov said on Tuesday, according to TASS.

Speaking to RBC TV ahead of the St. Petersburg International Economic Forum, Manturov explained that the savings come from reduced subsidy costs across various sectors, including industry, mortgages, and agriculture.

He added that while the central bank’s efforts to curb inflation are having an impact, they also affect the real economy. “When the economy cools down, of course, this affects the real sector,” Manturov said.

The deputy prime minister noted that the post-2022 push for import substitution required significant investment, contributing to inflation and prompting monetary policy tightening.

On the exchange rate, Manturov cautioned that a stronger rouble hurts the competitiveness of export-driven sectors such as metallurgy, chemicals, and mechanical engineering.

The Bank of Russia recently cut its key interest rate by 100 basis points to 20 per cent, down from 21 per cent.

Attribution: TASS
Subediting: M. S. Salama