In June, the Russian central bank lowered the interest rate by 100 points to 20 percent. The consensus for Friday's interest rate decision is that the central bank will lower it by another 200 points to an interest rate of 18 percent.
Anders Olofsgård, deputy head and lecturer at the Institute for East European Economics at the Stockholm School of Economics, says that it is not unreasonable that the inflation pressure has decreased somewhat - but that it cannot be ruled out that the interest rate cuts come after pressure on the central bank.
In principle, all economic sectors that are not critical to the war are having huge problems with these high interest rates.
Borrowing at interest
In Russia, about 55 percent of corporate loans have a variable interest rate, writes the independent newspaper Moscow Times. According to the newspaper, the head of the Russian major bank VTB, Andrej Kostin, says that companies have started taking out loans to cover the interest costs.
At the same time, there is a growing concern about all the loans that banks have given to the defense industry with government guarantees that they will cover them if needed. According to sources for Bloomberg, at least three of the major banks are discussing seeking government support in the coming year to handle the amount of bad loans.
Questionable inflation data
Russia sharply raised the key interest rate to record levels at the end of last year after a long time denying problems with inflation. In December, the country's president Vladimir Putin also admitted for the first time that the country's inflation was "alarming". It was then said to be around 8 to 9 percent, but internationally, many experts believe it was more like an inflation of 20 percent.
During the annual economic meeting in St. Petersburg in June, the president had again changed his mind and said that he would not allow the efforts to cool down inflation to lead to a recession.
It is important to keep focus on all indicators of how our different sectors and companies are doing, he said then according to Politico.
Two days before the interest rate decision, the Russian state statistics agency Rosstat claims that they have measured deflation in the past week and that the inflation rate over the past year would have fallen to 9.3 percent from previously 9.7 percent in just one week. The strongly disputed, government calculations of inflation are, however, still clearly above the central bank's target of an inflation rate of 4 percent.
