Russian Central Bank to cut interest rates
Today, the Russian Central Bank will cut the rouble’s interest rate to 9%, marking the third consecutive cut since March. The move demonstrates confidence in Russian markets as inflation drops.
This optimistic move may be set to overshadow the weaknesses of Russian industry. The country’s auto and oil industries have been affected by sanctions and shrinking markets, as Eastern Europe tries to further its economic independence.
The Russian defence industry has been among the worst hit. Sales of Russian arms have been specifically targeted by American and EU sanctions, which carry a backlash for outside states purchasing Russian arms. These sanctions kick-started an overhaul of the state’s defence acquisition process. The Kremlin cut its military budget by over 6% this year and plans to transition to over 50% use of dual-use systems by 2030, diminishing investment in military-led weaponry modernisation projects.
Putin may use economic optimism to support his militarised rhetoric, but the Russian economy cannot sustain his military-industrial complex.