Logical cooling: The slowdown in GDP became the main topic at the Fincongress 2025

The central theme of one of the most important events of the year in the financial market, the Financial Congress 2025— was the cooling of the economy. The issue is not new: the discussion began a few weeks ago at the SPIEF in the same place, in St. Petersburg. Now the head of the Savings Bank, German Gref, has expressed his position. According to him, the Central Bank's harsh policy slows down GDP too much. The chairman of the regulator, Elvira Nabiullina, stands her ground: a cooling of the economy is inevitable after the rapid growth of previous years, and a high key rate only helps curb inflation, which puts the most pressure on the least well-off segments of the population. What kind of bet can be considered optimal and what will happen to its level in the near future — in the Izvestia article.

Why is the Russian economy slowing down

The Russian economy is at risk of "overcooling," but in general, its slowdown is natural, especially during the period of special operations and sanctions. These conclusions were reached by the participants of the plenary session of the Financial Congress of the Bank of Russia. The head of the Central Bank, Elvira Nabiullina, the chairman of the Savings Bank, German Gref, and the head of VTB, Andrei Kostin, argued about how adversely the key rate affects the business situation in the country. This topic was raised just a couple of weeks ago at the largest annual economic event, SPIEF 2025, and has once again found itself in the spotlight.

— A slowdown in the economy is inevitable after the rapid growth of previous years, — said Elvira Nabiullina.

The main benchmarks are the inflation rate and the labor market situation, the head of the Central Bank emphasized. According to her, the economy has been overheated in the last two years: prices have been rising too fast, there has been an acute shortage of workers, and the money supply (of all money in the economy) has been increasing at a rate of up to 20% per year. These figures peaked at the end of 2024.

However, the head of the Savings Bank, German Gref, noted that now we are talking not just about cooling excessively overheated GDP, but about slowing down the economy too sharply. According to him, the Central Bank's rate has become the main condition for this process.

Elvira Nabiullina objected: the slowdown in the economy is not due to the high interest rate and the policy of the Central Bank, but naturally - largely due to the lack of labor. The only question is whether the country will go through this period with low or high inflation.

According to the head of the regulator, it is important to treat the cooling of the economy as a natural process. The fundamental overheating that Russia faced in 2023-2024 occurred for the first time in the country's history since the transition to a market economy.

VTB CEO Andrey Kostin, in turn, said that inflation is driven by high spending on national defense, which stimulates the development of certain industries. He added: "the president helps us talk about problems in the economy," who spoke about it twice last week. Kostin noted that "we are always very timid" when we try to talk about the economic situation. But we must not forget that about 28,000 sanctions have been imposed on Russia. This leads to a strong increase in the cost of many operations that the business performs, and then transfers to the cost of goods.

The Central Bank's task now is to find a balance between growth and fighting inflation in these difficult conditions, Andrei Kostin summed up.

Prohibitive interest rates in the economy are not the cause, but the consequence of accumulated imbalances caused by the combined effect of sanctions and unproductive government spending, independent expert Andrei Barkhota told Izvestia.

What should be the key bid?

According to Andrey Kostin, in such circumstances, it may be appropriate to raise the inflation target from 4% to 8% in order to reduce monetary policy requirements. The head of the Central Bank opposed this idea. According to her, in this case, the key rate will remain at a high level, and due to pressure on prices, businesses will not be able to make long-term plans.

The 4% inflation target is fair for developing countries, because they are, in principle, less stable, explained Boris Kopeikin, chief economist at the Stolypin Institute for Growth Economics. In fact, it may be even lower — about 2%.

As for the optimal key rate, German Gref said that for the attractiveness of the stock market, the real rate (nominal minus inflation) should be about 4%. Against the background of high interest rates on deposits, which guarantee a yield of 15% per annum, investments in securities look unprofitable for economic participants.

Against this background, the level of the key rate of 15-17% by the end of the year looks fair and maximally balanced for all parties — both the Central Bank and business, said Dmitry Tselishchev, managing director of the investment company Rikom-Trust.

"With a rate above 17%, a large number of investment projects, especially in the segment of small and medium—sized businesses, become economically impractical and unreasonably expensive," the expert added.

But a sharp decline in the key rate may also trigger an acceleration of inflation, Dmitry Tselishchev warned.

Kostin called Nabiullina the best chairman of the Central Bank in the world

The panelists also discussed ways to transition to balanced economic growth. According to the heads of the largest banks of the Russian Federation, it is important to ensure high labor productivity due to the development of technology. Gref believes that it makes sense to "raise the bar" and focus on world-class developments. He stressed that even small companies have a chance of rapid growth.

The low level of robotics in Russia — 8.5 times less than the global average — does not yet fully replace the shortage of labor, Vasily Kutyin, Director of Analytics at Ingosstrakh Bank, explained to Izvestia. In addition to technology development, it is possible to solve this problem only through staff training and building a transparent and understandable mechanism for encouraging effective work.

"We are all on the same side in the fight against the Central Bank, this unites us," Kostin said, commenting on Gref's words that positive competition in the Russian banking sector supports the market and helps its development.

"I was almost moved and burst into tears by how friendly your competition is, and then you remembered about the Central Bank,— Nabiullina retorted.

It is worth noting that, in general, Kostin called Nabiullina the best chairman of the Central Bank in the world.

— We once had another chairman of the Central Bank. In 2008, when there was a global crisis, he raised the rate and demanded an increase in banks' loan portfolios. But he probably didn't know the basics of financial literacy well," he recalled. — Our current head is one of the most experienced, the best, I would say, the best chairman of the Central Bank in the world, so the Central Bank is doing everything right in fact.

What was announced on Fincongress about the ruble exchange rate

The panelists discussed another problem: the instability of the ruble exchange rate.

— Exporters would like a weaker exchange rate, but I am not sure that our citizens will subscribe to this <...> It is important that the course is in the interests of the entire economy, — Elvira Nabiullina emphasized.

Many people say that a weak ruble is more beneficial to the budget, the head of the Central Bank recalled. However, even here everything is not so simple: a strong national currency reduces the cost of imports and makes savings in rubles more profitable for investors, which helps slow down inflation. And this will eventually reduce the key. At the same time, the decline in interest rates in the economy leads to lower government spending, because the cost of government-backed loans depends on the key one.

The Central Bank does not provide forecasts for the ruble exchange rate, but Nabiullina stressed that it is necessary to strive for a strong national currency. According to her, a weak exchange rate is a sign of the vulnerability of the economy and investors' distrust of the local financial system, and this can hardly be called a positive thing.