Russia Economy Faces 'Hypothermia' Amid High Inflation, Export Cuts

Russian Economy Minister Maxim Reshetnikov has warned that the country is facing economic 'hypothermia' due to high inflation and the burden of military spending related to the Ukraine invasion. Despite inflation forecasts indicating a decline to 7-8% in 2025 and 4% by 2026, the Bank of Russia has maintained a high interest rate of 21%, significantly higher than rates in the UK and US, which is restraining investment and economic growth. Reshetnikov urged the central bank to consider recent signs of slowing inflation, with annual inflation recalculated in recent weeks at 3-4%, when setting upcoming interest rates, highlighting risks of an overheated restrictive policy. President Putin has called on officials not to freeze the economy with prohibitively high borrowing costs, which analysts interpret as a push toward easing monetary policy. The cooling economy is evidenced by major exporters like Rusal and Gazpromneft reducing commodity shipments, reflecting subdued demand. The central bank's next rate-setting meeting on June 6 is highly anticipated as Russia grapples with balancing inflation control and economic growth amid geopolitical tensions.