Russia monetary base falls to RUB18.685T in August, 29th week

Russia monetary base falls to RUB18.685T in August, 29th week

Russia's monetary base has decreased to RUB18.685 trillion as of August 29, marking the 29th week of the year. This significant drop is attributed to the Bank of Russia's (CBR) ongoing efforts to manage inflation and support economic stability in the face of persistent external pressures and geopolitical uncertainties.

The CBR's latest Medium-Term Outlook Report, released on September 4, highlights the challenges facing the Russian economy. The report underscores the bank's commitment to maintaining a 4% inflation target, despite the current inflation rate of 8.8% in August [2]. The central bank projects that inflation will return to the 4% target by mid-2025, but acknowledges the need for cautious monetary policy to avoid a recession.

The report also notes that the economy continues to grow, albeit at a slower pace. The baseline scenario projects GDP growth of 1–2% in 2025, 0.5–1.5% in 2026, and 1.5–2.5% in 2027–2028. However, the central bank warns that structural constraints and geopolitical pressures pose significant risks to economic growth and inflation control [2].

The CBR's monetary policy framework includes four scenarios for the coming years, each with different assumptions about economic growth and inflation. The bank's approach remains data-dependent, with interest rates expected to fall gradually to an average of 12–13% by 2026, following a series of rate cuts [2].

The report also addresses the challenges posed by the budget deficit, which has exceeded the planned 1.7% of GDP. The fiscal shortfall already surpassed 2% of GDP by the end of July, reaching a record 4.8 trillion rubles ($59.4 billion). The central bank attributes this to weak revenue dynamics, particularly in imports and profit tax, and outpaced spending [1].

The CBR's outlook emphasizes the importance of maintaining a floating exchange rate, which it considers a key element of Russia's monetary policy framework. The report also underscores the need for continued digitalization of the financial sector, including the development of the digital ruble and financial infrastructure, to support efficiency and resilience [2].

In conclusion, Russia's monetary base has fallen to RUB18.685 trillion, reflecting the central bank's efforts to manage inflation and support economic stability. The CBR's Medium-Term Outlook Report outlines the challenges and risks facing the Russian economy, with a focus on maintaining a cautious and data-dependent monetary policy.

References:
[1] https://www.bloomberg.com/news/articles/2025-09-02/bank-of-russia-warns-budget-pressures-will-force-spending-cuts
[2] https://www.intellinews.com/russia-s-central-bank-releases-its-closely-watched-annual-medium-term-outlook-report-399546/?source=russia