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Russia’s economy may be cooling too fast, Economy Minister Maxim Reshetnikov warned on Monday, urging the central bank to cut its high interest rates.

The Bank of Russia has kept its key rate at 21 percent since an emergency increase in October. The tight stance helped slow soaring prices but has also choked investment, just as the boost from heavy wartime spending starts to fade.

Moscow’s economic authorities usually present a unified front, yet high interest rates, large budget spending, and strict capital controls have triggered open disputes in recent years.

In August 2023, the central bank was forced to call an unscheduled meeting and lift rates by 3.5 percentage points after President Vladimir Putin’s then economic adviser, Maxim Oreshkin, publicly blamed “soft” monetary policy. In March this year, Putin told officials not to freeze the economy “like in a cryotherapy chamber,” a remark many analysts read as a call to begin easing.

Speaking to lawmakers in the State Duma on Monday, Reshetnikov said weekly data suggest annualized inflation had dropped to between 3 and 4 percent. “We expect that May figures will confirm this trend, and we, of course, expect the central bank to consider it, because we also see risks of economic hypothermia in the current regime,” he said.

The economy ministry puts consumer price growth for 2025 at 7.6 percent, a level Reshetnikov called “realistic.”

Signs of cooling demand in Russia are already visible

A Russian Railways planning paper last week showed major exporters, including aluminum group Rusal and oil producer Gazpromneft, cutting the volumes of metals and oil products they intend to move by rail. The document points to weaker sales at a time when the broader economy is slowing.

Many factories say the 21 percent borrowing cost is too high and have trimmed investment plans. The ministry foresees gross domestic product expanding by 2.5 percent this year, compared with the central bank’s own forecast of 1 to 2 percent. The next rate-setting meeting falls on 6 June.

The central bank, for its part, has said it will weigh incoming data but warns that an early cut could reignite price growth if households rush to spend savings and if the ruble comes under new pressure from sanctions or falling export revenues.

While economic debate intensifies at home, Russia has shown little interest in peace talks with Ukraine. Military analysts describe recent short “ceasefires” as performative, and efforts by U.S. President Donald Trump to draw President Putin into negotiations have failed.

Instead, Moscow is widely expected to launch a fresh summer offensive aimed at securing more ground in the south and east of Ukraine, areas its forces partly occupy. Success on the battlefield could strengthen Russia’s hand in any eventual talks.

Even so, growing pressures, from securing enough weapons to coping with sanctions on exports like oil that generate a major portion of the revenue, may pull the Kremlin toward the negotiating table.

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