Russian President Vladimir Putin made a rare call for the Central Bank of Russia (CBR) to cut interest rates on June 11 for the first time since the Central Bank’s benchmark rate moved into double digits two years ago.

As the economy slows and inflation continues to fall, the Russian president made a rare intervention into monetary policy at a meeting with the Central Bank’s team that was not attended by CBR governor Elvia Nabiullina, who has disappeared in recent weeks, reportedly on “sick leave.”

Speaking at a government meeting on investment activity, Putin said: “The situation is under control, and the measures being taken are yielding the desired results. Inflation is falling—what is it at now? Just over five percent. Therefore, I believe we are justified in expecting both a cut to the key rate and the achievement of other necessary targets,” The Bell reports.

As IntelliNews reported, the economy has taken a sharp downturn as a result of Nabiullina’s unorthodox experiment to pull inflation down by artificially cooling economic growth. And it has worked with the inflation rate falling faster than expected, halving from over 10% at the end of 2024. (chart)

However, the rapid cooling is causing increasing amounts of pain for the population, and is hitting small- and medium-sized enterprises (SMEs) particularly hard. The number of small businesses that are going bust accelerated sharply in the first quarter of this year, as incomes and consumption started to drop. Big companies are also feeling the pain of sky high interest rates that are eating up their profits as debt servicing becomes increasingly unaffordable. At the end of last year Vedomosti identified the 13 drowning men – large corporations that were struggling to meet their debt servicing obligations. The slowdown has sparked fears of a banking crisis and led regular Russians to switch to cash payments.

Putin’s comments are a reflection of these rising concerns and an attempt to manage the growing crisis. According to The Bell, Putin had previously discussed the possibility of lower rates only cautiously and had generally deferred to the Bank of Russia’s judgement. Since she took over as governor in 2013, Putin has thrown his personal support behind Nabiullina and generally given her complete autonomy to run the financial system as she sees fit.

At the St Petersburg International Economic Forum last week, he appeared to defend the regulator’s restrictive stance again, saying: “The Central Bank and financial authorities have adopted a series of tough decisions to curb rising inflation and improve macroeconomic indicators.”

However, the improving situation with inflation is building pressure on the CBR to accelerate its easing policies. Over the last year, the regulator has made 550bp of rate cuts bringing the prime rate down to 14.5% from a peak of 21%. However, a 2pp increase in VAT at the start of this year has fuelled inflationary pressures mildly, leading Nabiullina to warn the pace of easing may slow this year somewhat. Nevertheless, officially the CBR says the economy is still on track to reach its target 4% rate of inflation sometime in the second half of 2027 with rates falling to around 13% in that period.

Fresh data published by Rosstat on June 10 appeared to support the president’s assessment of improving price dynamics. Annual inflation slowed to 5.31% in May from 5.58% in April, while monthly inflation came in at 0.17%, below consensus expectations of 0.22%. Consumer prices have risen 3.29% since the start of the year, a lower pace than during the same period in 2025.

Nabiullina was not at the meeting and hasn’t been seen for more than a week, reportedly suffering from an unnamed ailment. The central bank chief also missed last week’s economic forum and a securities market conference this week. Two sources familiar with the situation told The Bell that she remains absent for health reasons.

The central bank has been under sustained pressure from big business over its high-rate policy. Oligarch Oleg Deripaska has argued that the current economic difficulties stem from a “shock policy of senseless ruble strengthening” and has called for rates to fall to 6%. The CEO of Sberbank German Gref said earlier this year that Russia’s economy cannot grow unless interest rates fall to 12% or less. The Economics Ministry has just cut its economic growth forecast for 2026 from 1.4% to 0.4%.

“The economy is not in spectacular shape, but it is resilient. Still, the budget is the number one topic — in the media, in central bank statements, and in behind-the-scenes talks,” said Sofya Donets, chief economist at Moscow-based T-Investments.

A strong ruble is adding to the economic headaches. The currency has strengthened 12% against the dollar since the start of 2026, according to Bloomberg calculations, and has been the best performing currency in the world in 2025 and also in the first quarter of this year. A strong ruble reduces the government’s budget income as oil prices in the budget are estimated in dollars, but spending is in rubles. The stronger the ruble, the less oil and gas revenues the government earns.

Putin nevertheless defended the ruble’s exchange-rate regime, saying: “We aren't doing anything artificial here, and I think that is something specialists—including investors—should evaluate.”

Markets are now focused on the CBR’s next monetary policy meeting on June 19. While slowing inflation strengthens the case for a rate cut, recent weekly data showed price growth accelerating to 0.20%, driven in part by rising fuel and food costs. The central bank has also warned of external inflationary risks linked to tensions in the Persian Gulf.