The Bank of Russia cut its key rate to 14.5% on Friday, the latest move in a series of reductions aimed at jump‑starting growth after President Vladimir Putin chastised officials for a sluggish economy. War spending and sanctions have pushed inflation to 5.9%, forcing policymakers to balance cheaper credit against rising price pressures. Oil prices surged amid the Middle‑East conflict, offering a brief reprieve.

Despite the rate cut, Russia’s economy shrank 1.8% in the first two months of 2026 versus the same period a year earlier. An IMF revision lifted the growth forecast to 1.1% on the back of higher crude, gas and fertilizer prices, while March oil revenues nearly doubled, pushing the average crude price up more than 30% in April.

Fiscal pressures mount: the finance ministry reported a budget deficit topping $60 billion in the first quarter, eclipsing the full‑year target. Moscow responded by resuming foreign‑currency and gold purchases to bolster reserves, yet corporate hiring stalls and part‑time work hits pandemic highs. With inflation entrenched, the central bank’s room to cut rates further narrows, leaving growth prospects tightly constrained.