The central bank of Russia further reduced its benchmark interest rate on Friday, trying to find a way to revive the country’s economy after President Vladimir V. Putin scolded officials over its lackluster performance.
The huge costs of the war in Ukraine have left Russia in a bind. Starting last June, the Bank of Russia has made a series of rate cuts — including a reduction to 14.5 percent from 15 percent on Friday — in hopes of encouraging growth. But as it dials down rates, it risks stoking inflation that is already elevated because of overspending on the war.
Russia has benefited in recent weeks from an increase in oil prices caused by the war in the Middle East. Still, its economy stands on the precipice of crisis because of the high interest rates and Western sanctions that have limited energy export revenues. After years of growth fueled by the war, Russia’s economy contracted by 1.8 percent in the first two months of the year, compared with the same period in 2025.
Last week, Mr. Putin ordered his top economic officials to act to improve the situation. Speaking in the Kremlin, Mr. Putin said he wanted to “hear detailed reports today on the current economic situation and on why the trajectory of macroeconomic indicators is currently falling short of expectations.”
“I look forward to hearing proposals for additional measures aimed at restoring growth in the domestic economy,” Mr. Putin added.
His comments acknowledged increasing concern inside the Kremlin about the economy. In December, Mr. Putin had called the economic slowdown “a price paid for maintaining the quality of the economy and macroeconomic indicators.”
Russia has had some relief because of the windfall from the war in Iran. Russian oil revenues nearly doubled in March from the month before, a report by the International Energy Agency said last week.
According to Argus Media, a price reporting agency used by the Russian government to calculate its oil extraction taxes, the average price of Russian crude has increased by more than 30 percent in April.
Russia calculates its oil taxes using a complex formula with a one-month lag and has yet to release official data for March.
Russia has also benefited from increases in the prices of other resources, including gas, fertilizers and aluminum.
Citing higher commodity prices, the International Monetary Fund last week raised its forecast for Russia’s economic growth to 1.1 percent from 0.8 percent.
While the Russian government pondered cutting expenditures this year before the war in Iran, the Russian Finance Ministry announced on Thursday that it would resume buying foreign currency and gold to add money to the country’s rainy day fund.
Still, the reprieve does not rectify the structural difficulties facing the Russian economy. Because of the war in Ukraine, Moscow cannot stop its overspending. The predicament fuels inflation — which currently stands at 5.9 percent — which means interest rates must remain high. And just as Russia benefits from rising energy prices, the oil crunch also risks a further boost in inflation.
The signs of an unfolding crisis are manifold. Most Russian companies do not plan to expand their staffs until the end of the year, according to data released by the central bank last week. At the end of last year, the number of people working part time or on standby rose to the highest level since the pandemic, the regulator said.
In April, the Russian Finance Ministry reported that the national budget deficit exceeded $60 billion in the first three months of the year, surpassing the deficit projected for all of 2026.
Increasing economic pressure has started to spill into the country’s politics. On Friday, VTsIOM, a state-run pollster, reported that Mr. Putin’s approval rating had fallen for the seventh consecutive week, to 65.6 percent, its lowest level since the invasion of Ukraine in 2022.
On Tuesday, Gennady Zyuganov, the head of the Communist Party in the State Duma, the lower house of the Russian Parliament, warned that if the government did not improve the economic situation, “by fall we will face what happened in 1917,” referring to the deposing of the Russian monarchy.
But Russian experts said that while the downturn was real, the country’s economy was still far from cracking. Should the oil windfall continue, Russia could markedly reduce its deficit, easing the pressure on the country’s finances.
“The Russian economy has entered yet another trouble zone,” said Natalia V. Zubarevich, an economist in Moscow. “We don’t know how long it will last, though it will likely be quite protracted.”
“This isn’t a ‘fall down, get back up’ kind of crisis — the nature of this downturn is different,” she added. “But again, it is not fatal.”
Ivan Nechepurenko covers Russia, Ukraine, Belarus, the countries of the Caucasus, and Central Asia.
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