Putin claims Russian economy overheated, inflation at worrisome levels – Reuters

The Russian economy is showing signs of overheating, causing a worryingly high inflation rate.

Source: Kremlin leader Vladimir Putin during a press conference; Reuters

Details: Speaking to citizens in his annual live broadcast, Putin supported the Russian Central Bank's tight monetary policy but noted that the regulator could act more timely.

The central bank is expected to raise its key policy rate by 200 basis points to 23% at the next meeting on Friday. This is the highest level in over 20 years, and businesses have strongly criticised such a tight monetary policy.

Quote from Putin: "There are some issues here, namely inflation, a certain overheating of the economy, and the government and the central bank are already tasked with bringing the tempo down."

More details: The Kremlin leader also said that before the broadcast, he had spoken to Russian Central Bank Governor Elvira Nabiullina, who warned that inflation in 2024 would reach 9.2-9.3%, which is significantly higher than the central bank's forecast of 8.5%.

Putin added that due to tight monetary policy and government measures to cool the economy, economic growth in 2025 will go down compared to this year’s 4%.

Quote from Putin: "I think the (growth rate) next year should be somewhere around 2-2.5%, a sort of soft landing in order to maintain macroeconomic indicators."

Background: 

• Ukraine's economy remains a quarter smaller than in 2021, but for the first time since the start of the Russian full-scale invasion of Ukraine in 2022, it is outperforming the Russian economy in several key respects.
• Elvira Nabiullina is facing harsh criticism from the political and business elite over record high interest rates.

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