Aspirin for the economy

The rate, like a temperature, is reduced, but does the patient recover

The Board of Directors of the Bank of Russia on July 25, 2025 decided to reduce the key rate to 18.00% per annum (by 200 B.P.). The current inflationary pressure decreases faster than predicted earlier. The growth of internal demand slows down. The economy continues to return to the trajectory of balanced growth - this is how the official release says.

Let's try to figure out why the Central Bank was forced to take this step: why it reduced the dose of bitter medicine for the patient with fever - whether this is evidence of a recovery from a chronic ailment, or - just shot down the temperature so that the relatives were not worried.

Confirmation of forecasts

Reducing the rate by 2 percentage points, the Central Bank pleased analysts - it was this decision that most official and unofficial commentators predicted. Even before the Central Bank meeting, the markets themselves “reduced bets” themselves: banks gave loans and deposits at rates, as if “turnkey” 16-17%, bonds also fell in price (their profitability fell by 2-3%).

Yes, the economy began to slow down steadily. People take less loans (especially consumer ones), business reduces loans (the worst indicators since 2016), and the company began to earn less (especially exporters). Inflation really also slowed down (according to the results of June, excluding prices at the beginning of the second half of the year), and people began to believe that the products would no longer rise as quickly as before (judging by the polls of the FOM).

GDP growth remained in the former corridor (1-2%), consumer activity is barely glow (+0.5–1.5%), and investments, although they have lost their previous impulse, still demonstrate timid revival.

The labor market, until recently overheated, is gradually cooling: the shortage of personnel is reduced, although unemployment is still record low. Salaries, however, continue to grow faster than performance - like an engine that has been operating at increased speeds, although the "car of the economy" has already begun to slow down.

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Three main reasons for reducing the rate

1. Inflation falls faster than waiting

Now: 4.8% in annual terms (almost targeted 4%).

Annual inflation: 9.2% → forecast for the end of the year: 6–7%.

What is getting cheaper:

• Electronics (phones, laptops)

• Vegetables/fruits (because of the season)

• Cars (thanks to the strengthening of the ruble)

What is getting more expensive:

• Cafe/restaurants (people often eat outside the home)

• Utilities (tariffs grew in July)

Prices are growing more slowly, but not everywhere. For example, you will have to pay more for the repair of the refrigerator, and less for a new refrigerator.

2. The economy slows down

• People take less loans (especially consumer).

• Business reduces investments (except for industries supported by the government).

• The unemployment is record low, but salaries are growing faster than performance.

You can find work, but companies do not have time to earn as much as employees want to receive. This is a risk for inflation.

3. Money is still "expensive"

• Real rate (bet minus inflation): ~ 12% - this is a lot.

• Loans grow weakly:

• Mortgage: +3-6%

• Consumer loans: fall

• People are saving, not spending. Banks give little loans.

Optimism, with restrictions

“Inflation is reduced, including in a stable part,” Elvira Nabiullina said in her speech. Indeed, current prices of prices (4.8% in annual terms) approached the target 4%. However, a complex mosaic is hidden behind this optimistic trend:

• Significant reduction in electronics and household appliances (“Prices for individual positions are even reduced for several months in a row”);

• Noticeable rise in price of services, especially in the field of catering;

• Seasonal decrease in prices for vegetables and fruits.

“The growth of demand is gradually slowing down,” says the head of the Central Bank. The economy demonstrates obvious signs of cooling:

• Consumer lending is reduced by a record pace;

• Investment activity is reduced, with the exception of the state -contained sectors;

• The labor market retains tension, despite the record low unemployment.

Nabiullina pays special attention to inflationary expectations: “Although the current price growth rate has already approached 4%, it is necessary that this trend is fixed.” It is this psychological factor that remains the main stumbling block on the way to sustainable stabilization.

Monetary conditions, according to the regulator, " remain tough, but somewhat softened compared to June . " This is manifested in:

• Decrease in the profitability of bonds;

• Moderate reduction in deposits;

• Slowing down the growth of money supply.

External risks, including a predicted decrease in oil prices to $ 55 per barrel, add caution in the actions of the Central Bank. As Nabiullina emphasizes, “ the incessive risks continue to prevail” over disinflation.

Indeed, food inflation and inflation in the service sector remain two -digit - 11.9% and 12% g/g, respectively, and the slowdown in prices up to 4.5% g/g in the non -food segment is largely associated with the strengthening of the ruble, and the trend will turn around as soon as the ruble begins to weaken.

The main message of the regulator sounds extremely clearly:

“Monetary policy ... should remain tough as much as it will be required for a sustainable return of inflation to 4%.”

This means that:

• Further decrease in the rate will be gradual;

• Any acceleration of inflation can stop the softening process;

• Inflational expectations remain the key landmark.

Thus, the decision of the Central Bank is a balanced step, taking into account both the achieved successes in the fight against inflation and the persistent risks. As Nabiullina notes, "we are in the way of returning inflation to the goal, but this path has not yet been completed."

Change of tonality: how the language of releases of the Central Bank of the Russian Federation changed

2025 was a turning point in the communication of the financial regulator. If you trace the evolution of applications, a gradual transformation is visible: from aggressive rigidity to a balanced neutrality with elements of softening.

• February : "Inflation is unacceptably high ... They are ready to return to an increase in the rate."

Signal: Ultrazhno, almost threatening .

• March : “Inflation is reduced, but the base is still high ... The probability of additional. The increase has decreased. "

Signal: moderately fierce, but already with glimpses of hope.

• April : "The price pressure decreases ... but you need to maintain stiffness for a long time."

The first signs of softening, although caution prevails.

• June : "A significant slowdown in inflation ... We reduce the rate, but remain stiffness."

Neutral signal: the Central Bank for the first time in a long time does not threaten tightening.

• July : "Inflation decreases faster than the forecast ... allows you to continue to reduce the rate."

The softest signal in 1.5 years, but without loss of vigilance.

The Central Bank no longer talks about the risk of raising the bet , but does not promise a sharp softening. A further decrease in the rate is only one of the possible scenarios. The regulator left itself a space for maneuver, and the next steps will depend on three factors:

1. Inflation - if its slowdown stops by 7–8%, the Central Bank can suspend softening;

2. Budget policy -new government expenses are able to cross out the successes of monetary regulation;

3. The external conjuncture - weakening of the ruble or unexpected solutions of the Fed can be adjusted.

Symptomatic treatment

Imagine that the economy is a patient with high temperature (inflation). The doctor (Central Bank) prescribed a strong medicine (a high rate of 20%) to knock down the heat. Now the temperature has fallen to 37 ° C (inflation has slowed down), so the doctor reduces the dose of the drug to 18%. The problem is that this is a removal of symptoms. The Central Bank cannot be eliminated the reason for the fever of the Russian economy.

Today's decrease in the bet is only a superficial symptom. But the “fever” provokes a systematic break in economic ties that turned the Russian economy into a semblance of sand clocks: there is financial capital, but its transformation into real goods is extremely difficult .

• Finance : Previously, business could take loans in euros at 3%, now ruble at 15%+;

• Logistics : supplies chains lengthened by 30-50%, and costs increased significantly;

• Technologies : Even Chinese analogues (like chips for an auto industry) are half measures that reduce performance.

The conditional manufacturer of machine tools used to purchase German components for 100 rubles. Now the Chinese analogue costs 150 rubles. + 30 rub. logistics. As a result, the cost is +80%, competitiveness is lower. The trade restrictions have created the effect of economic friction - each ruble now works slower and less effectively .

Industries financed by the government - a paradoxical combination

Pros :

• 7-10 million jobs (enterprises financed by the government + related industries);

• High salaries in the regions (20-30% higher than average).

Cons :

• Resource funnel : the government sector takes capital, personnel and technologies without producing goods for the civilian market;

• Inflational overheating : workers have money, but you have to spend it at high prices - the consumer economy does not have time for demand.

Key problem: the government sector artificially supports demand, but does not create consumer goods. The result is a skew towards prices.

Both the government and the financial regulator understand this. Why did the regulator go for softening?

Not because inflation is defeated. The reason is in a combination of circumstances. The government needs taxes, and the economy reduces the course against the backdrop of reduction of export income. For the whole year, in the updated budget, the Ministry of Finance plans to spend 42.3 trillion, and receive income - 38.5 trillion. The expenses in January -June amounted to almost 21.3 trillion, income - 17.6 trillion. A year ago, for the same period, expenses amounted to 17.7 trillion, and income was collected by 17.1 trillion. Thus, expenses grew by the first half of 2024 by 20%, and income - by 3.5%.

According to the adjusted budget, oil and gas revenues for the year should amount to 8.3 trillion rubles. In the first half of the year, 4.7 trillion was received - almost 17% less than during the same period a year ago.

Oil and gas are no longer the only perpetrators: the agricultural sector, apparently, will fail due to crop failure. In such conditions, the authorities are forced to revise priorities:

Now it is more important to support at least some activity, even at the cost of accelerating inflation, than to stubbornly fight prices and aggravate the budget crisis. To do this, you have to reduce the bet.

Data, it would seem, in favor of the Central Bank. The price increase slows down: if in March prices jumped by 0.65%, then in June - only 0.2%. An annual inflation in June is 9.4%, which is better than the April forecast of the Central Bank.

But in July, the rise in the cost of housing and communal services and gasoline will again spur inflation. And the slowdown itself is uneven: food and services are still valuable by 11–12% per year, and the cost of non -food goods (4.5% g/g) is kept only on a strong ruble. As soon as he trembles, the trend will turn around. The inflationary expectations of citizens are also in no hurry to decline: in June - 13% versus 13.4% in May, and after a summer jump in tariffs, they can grow.

So the point is not in the successes of disinflation - just the economy slows down too quickly, and export income falls. In such conditions, “overheating” no longer seems to be a threat, and the Central Bank is ready to change the course. But even this will not become a panacea: the effect of reducing the rate will not appear immediately, and the budget needs help here and now.

The combination of a soft rate and a weak ruble can disperse inflation again. But the government is not going to adjust its policy, which means that expenses will grow.

Priority sectors are worth a diverse-the government insists that in 2025, the industry “meaning” to solve political problems should work no worse than in 2024. Neither the bet nor inflation is scary to this sector. The authorities can correct the budget, but only by shifting the costs of those who are not a priority. There are no painless decisions - just a choice who will lose more.