Russia’s central bank downgraded the country’s growth forecast and lowered a key interest rate, further signs of weakening in the war-weathered economy facing high inflation and international sanctions.
Though high inflation would normally lead to raising interest rates to reduce it, the bank wants to make it cheaper to borrow — even if that ultimately drives inflation further up — because Moscow needs high industrial output to produce arms for its war in Ukraine. Sanctions, and Ukrainian attacks on oil refineries, are also hitting businesses. Moscow is cut off from global financial markets, and has huge amounts of yuan from selling oil to China, but cannot spend them: It will issue yuan-denominated bonds in an attempt to bypass Western regulators, Reuters reported.