The CEO of Sberbank, Russia’s largest lender, renewed his calls Tuesday for the Central Bank to cut its key interest rate, arguing that policymakers have poured too much cold water on the economy in their fight against inflation driven by military spending.
“An economy simply cannot survive for a prolonged period under the weight of the extremely high real interest rates we’re seeing today,” Herman Gref said during Sberbank’s annual shareholders meeting.
Russia’s Central Bank hiked its key interest rate to a two-decade high of 21% in late 2024 as inflation surged. While it has since pursued a policy of monetary easing — lowering borrowing costs to 14.25% earlier this month — the regulator warned that a widening budget deficit and growing problems in the domestic fuel market may force it to keep rates elevated for longer.
Gref called it “completely irrational” to use monetary policy to combat inflation caused by what he described as “one-off factors,” including the global energy crunch sparked by the U.S.-Israeli war against Iran.
“We’ve already overcooled the economy. The rate needs to come down,” Gref said.
