• Russia's Central Bank reduces interest rate to 20% from 21%.
• This marks the first rate cut since September 2022.
• The economy shows signs of cooling but inflation remains above 10%.
• Political pressure and economic volatility have influenced this decision.
• The bank aims to curb inflation to its target of 4% by 2026.

On Friday, Russia's Central Bank lowered its benchmark interest rate by 100 basis points to 20%, a move from its two-decade high of 21%. This decision, the first rate cut since September 2022, was influenced by signs of economic cooling and easing price pressures. The bank noted in its statement that the "economy is gradually returning to a balanced growth path," despite ongoing inflation rates above 10% that are expected to remain until at least 2026, according to Indiatimes, AA, and Le Monde.

The central bank has been under pressure to cut rates, as high borrowing costs were perceived to hinder investment and stall economic growth. Governor Elvira Nabiullina indicated that the Russian economy was facing a "soft landing" without "overcooling," although annual economic growth slowed to 1.4% in the first quarter, the weakest in two years. Economists have pointed out that factors like falling oil prices and high interest rates put additional strain on the economy, as outlined by Indiatimes, AA, and Le Monde.

The increase in military spending due to the ongoing Ukraine conflict has contributed to rising prices and economic volatility. As the bank transitions to a lower interest rate regime, it plans to maintain a tight monetary policy until it meets its inflation target. It aims for annual inflation to drop to 4% by 2026, reflecting both ongoing challenges and attempts at economic stabilization, according to Indiatimes, AA, and Le Monde.