By Darya Korsunskaya and Gleb Bryanski
MOSCOW (Reuters) – Russian President Vladimir Putin urged his economic officials on Tuesday not to freeze the Russian economy as if it were in a “cryotherapy chamber” with their tight monetary policy ahead of Friday’s rate decision.
All 29 economists in a Reuters poll predict that the central bank board will keep its key interest rate on hold at 21%, the highest level in over 20 years, to tame inflation.
However, many economists, including some advising the government, have said that the economy outside the defence sector is already stagnating and blame central bank policy.
“It is clear that this (cooling) is inevitable. Both the government and the central bank have generally talked about it. Overall, there seems to be an agreement,” Putin told the congress of a Russian business lobby.
“It’s essential that everything proceeds as planned in practice, avoiding excessive cooling like in a cryotherapy chamber,” Putin added, referring to the wellness treatment in which people are exposed to temperatures as low as -140 Celsius.
Putin spoke during a so-called “silence week” when the central bank refrains from any public comments on its possible rate decision.
The central bank stunned analysts last December when it unexpectedly kept the key interest rate on hold following Putin’s call for a “balanced” decision, which was made one day before the board meeting.
In February it held rates again, as expected.
The central bank forecasts that the Russian economy’s growth rates will fall to 1-2% in 2025 from 4.1% in 2024 as a result of its monetary policy, while the government expects the economy to grow by 2.5% in 2025.
The central bank’s tight policy in recent months prompted criticism from business leaders who say it is stifling investment without achieving the goal of lowering inflation.
“Today, investment programs have practically come to a standstill,” Sergei Chemezov, head of the defence and industrial conglomerate Rostech and a longtime friend of Putin, told reporters at the same event.
(This story has been corrected to add 2024 growth figure and fix central bank’s economic growth forecast to 1-2% from 0.5-1.5% in paragraph 8)
(Reporting by Darya Korsunskaya and Gleb Bryanski; Editing by Alison Williams)
