Russian central bank cuts key rate by 200 bps as inflation subsides
(You can now subscribe to our
(You can now subscribe to our Economic Times WhatsApp channel
The Russian central bank cut its key interest rate by 200 basis points to 18% on Friday, as expected, and lowered its 2025 inflation forecast to between 6% and 7% from between 7% and 8%, as data showed that inflation was slowing down.The decision was in line with a Reuters poll of 27 economists. The cut is intended to revive lending and boost economic growth , which is expected to slow down sharply this year."Current inflationary pressures, including underlying ones, are declining faster than previously forecast. Domestic demand growth is slowing. The economy continues to return to a balanced growth path," the central bank said in a statement.Russia's consumer price index fell by 0.05% in the latest week, marking weekly deflation for the first time since September 2024, which set the stage for the central bank's decision, although the regulator says it is looking at longer-term trends.The central bank maintained its gross domestic product growth forecast at between 1% and 2%. The economy grew by 4.3% in 2024.The decrease brought overall price growth this year to 4.56%, compared with 5.06% for the same period last year. Annualized inflation slowed to 9.17% from its peak of 10.3% in March.The regulator was under intense pressure from the business community to start easing after it hiked the key rate to the highest level since early 2000s last year. Business leaders complained that at such a rate, investment no longer made sense.Despite this pressure, President Vladimir Putin backed the central bank's policy, but warned it not to overcool the economy.The rouble, which rallied by 45% against the U.S. dollar earlier this year in part due to the high key rate, has begun to weaken ahead of the expected rate cut and touched the 80 mark against the dollar on Friday.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
4 minutes ago
- Time of India
'You Signed A Death Pact': Khamenei Aide Vows To Block 'Trump Route' After Armenia-Azerbaijan Deal
'False And Fabricated': Centre Denies Reports Claiming Halt In Arms Purchase From U.S. Indian Defence Ministry officials have denied media reports claiming it paused US weapons deals in response to steep tariffs imposed by former US President Donald Trump. The Defence Ministry called the claims 'false and fabricated,' adding that procurement processes are proceeding as per standard procedures. It also clarified that Defence Minister Rajnath Singh's visit to Washington was never finalized, countering reports that it had been cancelled. Meanwhile, Indian refiners are reportedly pulling back from spot purchases of Russian crude amid tariff-related pressure. However, the government has issued no formal directive, and key oil cargoes from Russia are still expected to arrive as planned.#indiausrelations #defencedeals #ustariffs #rajnathsingh #russiaoil #trade #indianeconomy #geopolitics #modigovernment #defenceprocurement #toi #toibharat 19.1K views | 1 day ago
Economic Times
4 minutes ago
- Economic Times
Crude awakening for Nayara as geopolitics sounds alarm; symbol of Indo-Russian ties hit hard by West penalty
Synopsis Nayara Energy, once a symbol of India-Russia cooperation, faces significant challenges due to sanctions and global disruptions following the Ukraine invasion. These hurdles impact its exports, finances, and expansion plans, forcing a shift towards domestic markets and alternative strategies. The company navigates leadership changes and infrastructure concerns amidst potential ownership restructuring. Agencies Though Nayara is not directly sanctioned, its significant Russian ownership has triggered cascading effects. Mumbai: In August 2017, nine months after a consortium led by Russia's Rosneft bought Essar Oil's 20-mtpa refinery in Vadinar (Gujarat), it was renamed Nayara Energy. The name derives from the Hindi word 'Naya' (new) and 'Era.' It was chosen to signify its shareholders' vision of bringing a new era of development to the was born at a time India's petroleum sector was undergoing reform - the government had deregulated fuel retail prices, giving private fuel retailers such as Nayara an equal footing to expand their outlets. The reform gave sleepless nights for state-run oil marketing companies, which had hitherto dominated fuel retailing. Now, they feared losing market share to private players Nayara and Reliance was well with Nayara and it was on a growth trajectory until it was hemmed in by both the US and the European Union (EU), as they stepped up efforts to target Russia over its invasion of Ukraine. Its oil and energy revenue was low-hanging fruit. The company, once seen as a symbol of India-Russia economic cooperation, is now navigating a perfect storm - sanctions, global shipping disruptions, domestic regulatory pressure, a leadership churn and a digital infrastructure scare. Nayara did not respond to ET's emailed query as of press time. Russian Link For a company that accounts for nearly 8% of India's refining output and 7% of its retail petrol pump network, these challenges are testing Nayara's resilience as well as long-term strategy. Russia's national energy firm and a consortium of international investors Trafigura and UCP Investment Group had acquired the Essar asset for $12.9 billion. This was Rosneft's largest foreign investment in India's refining sector, providing it an entry into one of the fastest-growing world Energy owns the second-largest private refinery in India, as well as an oil depot terminal, a port, infrastructure and a chain of more than 6,000 fuel is this spate of expansion that is now July 18, the EU unleashed its 18th package of sanctions on Russia, which included restrictions on import of fuels refined from that nation's crude, slashing the price cap on Russian oil to $47.6 per barrel from $60 and targeting the shadow fleet involved in its transport. The price cap will take effect on September 3. Separately, US President Donald Trump has put 50% tariffs on Indian imports, accusing India of funding Moscow's war on Ukraine via its oil Nayara is not directly sanctioned, its significant Russian ownership has triggered cascading effects. Sanctions Biting Within a week of the latest EU sanctions, Nayara Energy chief executive Alessandro Des Dorides resigned and was replaced by Sergey Denisov, who had been with the company since July 28, Microsoft restricted Nayara Energy's access to its own data, proprietary tools and products, despite these being acquired under fully paid-up licences, according to the oil retailer. The US firm later restored services, once Nayara began legal actions against it. But the episode underscored the seriousness of the situation.'Nayara's troubles have just begun. It is not only barred from exporting refined products to Europe, but fearing penalties, shipping companies are pulling back from transporting its products. Insurers and trade finance providers are wary,' said a trader familiar with the matter, on condition of anonymity. 'This is restricting the company's ability to move product to its export markets—Europe, Southeast Asia and parts of Africa.'As per a Care Ratings note in July, exports constituted 25-30% of Nayara's total revenue, while the balance was domestic sales in India. Nayara has negligible direct exports to the EU, while its majority exports are via traders who, in turn, sell to multiple markets. That hasn't stopped Nayara from seeking alternative arrangements for payments as EU's sanctions threaten to bite. It is reportedly seeking a local bank to finance and wire payments for crude oil imports and to help it receive payments for refined fuel product exports. Potential Sale Burdened by the heft of sanctions, Rosneft has not been able to repatriate earnings from Nayara Energy in recent years. The lack of repatriation of earnings from the company is believed to be one of the key reasons it has been mulling selling the Indian unit, said people with knowledge of the the latest bunch of sanctions has impeded this too. Talks have been held with Indian conglomerates, with the company being valued at more than $20 UCP Investment Group, one of the largest financial investment groups in Russia, is also looking to sell its stake in Nayara Energy for over $5 billion. This, after Swiss-headquartered commodity trader Trafigura sold its 24.5% stake to Hara Capital Sarl, a wholly owned subsidiary of Italian energy investment firm Mareterra Group Holding, in January 2023. Industry players, however, said that due to the sanctions, Nayara's valuation could come down, making it an attractive asset for international buyers. New Strategies Global roadblocks have forced Nayara Energy to look inwards. Last week, it reached out to state-run refiners, offering them its export volumes of petrol and diesel to prevent a build-up of unsold the pivot to domestic markets offers near-term relief, it also squeezes margins. Export markets, especially Europe, historically offered better realisations. Domestic competition, more so from state-owned oil marketing companies, limits pricing power and all of this comes at a time when Nayara Energy was planning massive growth investments. It had announced plans to invest over ₹70,000 crore in the long term across petrochemicals, ethanol plants and marketing infrastructure expansion, among other projects. It had invested over ₹14,000 crore since August 2017 in various projects in India, including upgrading existing refining facilities, a new petrochemical plant and other infrastructure thanks to the sanctions, the company now risks losing technical support from European technology licensors, which is crucial to its refinery operations. The key question is whether Nayara can continue to push forward on diversification while its core refining-export engine sputters under the weight of western pressure.
Time of India
20 minutes ago
- Time of India
Crude awakening for Nayara as geopolitics sounds alarm; symbol of Indo-Russian ties hit hard by West penalty
Mumbai: In August 2017, nine months after a consortium led by Russia's Rosneft bought Essar Oil's 20-mtpa refinery in Vadinar (Gujarat), it was renamed Nayara Energy . The name derives from the Hindi word 'Naya' (new) and 'Era.' It was chosen to signify its shareholders' vision of bringing a new era of development to the asset. Nayara was born at a time India's petroleum sector was undergoing reform - the government had deregulated fuel retail prices, giving private fuel retailers such as Nayara an equal footing to expand their outlets. The reform gave sleepless nights for state-run oil marketing companies, which had hitherto dominated fuel retailing. Now, they feared losing market share to private players Nayara and Reliance Industries . All was well with Nayara and it was on a growth trajectory until it was hemmed in by both the US and the European Union (EU), as they stepped up efforts to target Russia over its invasion of Ukraine. Its oil and energy revenue was low-hanging fruit. The company, once seen as a symbol of India-Russia economic cooperation, is now navigating a perfect storm - sanctions, global shipping disruptions, domestic regulatory pressure, a leadership churn and a digital infrastructure scare. Nayara did not respond to ET's emailed query as of press time. Russian Link For a company that accounts for nearly 8% of India's refining output and 7% of its retail petrol pump network, these challenges are testing Nayara's resilience as well as long-term strategy. Russia's national energy firm and a consortium of international investors Trafigura and UCP Investment Group had acquired the Essar asset for $12.9 billion. This was Rosneft's largest foreign investment in India's refining sector, providing it an entry into one of the fastest-growing world markets. Nayara Energy owns the second-largest private refinery in India, as well as an oil depot terminal, a port, infrastructure and a chain of more than 6,000 fuel stations. It is this spate of expansion that is now threatened. On July 18, the EU unleashed its 18th package of sanctions on Russia, which included restrictions on import of fuels refined from that nation's crude, slashing the price cap on Russian oil to $47.6 per barrel from $60 and targeting the shadow fleet involved in its transport. The price cap will take effect on September 3. Separately, US President Donald Trump has put 50% tariffs on Indian imports, accusing India of funding Moscow's war on Ukraine via its oil purchases. Though Nayara is not directly sanctioned, its significant Russian ownership has triggered cascading effects. Sanctions Biting Within a week of the latest EU sanctions, Nayara Energy chief executive Alessandro Des Dorides resigned and was replaced by Sergey Denisov, who had been with the company since 2017. On July 28, Microsoft restricted Nayara Energy's access to its own data, proprietary tools and products, despite these being acquired under fully paid-up licences, according to the oil retailer. The US firm later restored services, once Nayara began legal actions against it. But the episode underscored the seriousness of the situation. 'Nayara's troubles have just begun. It is not only barred from exporting refined products to Europe, but fearing penalties, shipping companies are pulling back from transporting its products. Insurers and trade finance providers are wary,' said a trader familiar with the matter, on condition of anonymity. 'This is restricting the company's ability to move product to its export markets—Europe, Southeast Asia and parts of Africa.' As per a Care Ratings note in July, exports constituted 25-30% of Nayara's total revenue, while the balance was domestic sales in India. Nayara has negligible direct exports to the EU, while its majority exports are via traders who, in turn, sell to multiple markets. That hasn't stopped Nayara from seeking alternative arrangements for payments as EU's sanctions threaten to bite. It is reportedly seeking a local bank to finance and wire payments for crude oil imports and to help it receive payments for refined fuel product exports. Potential Sale Burdened by the heft of sanctions, Rosneft has not been able to repatriate earnings from Nayara Energy in recent years. The lack of repatriation of earnings from the company is believed to be one of the key reasons it has been mulling selling the Indian unit, said people with knowledge of the matter. But the latest bunch of sanctions has impeded this too. Talks have been held with Indian conglomerates, with the company being valued at more than $20 billion. Separately, UCP Investment Group, one of the largest financial investment groups in Russia, is also looking to sell its stake in Nayara Energy for over $5 billion. This, after Swiss-headquartered commodity trader Trafigura sold its 24.5% stake to Hara Capital Sarl, a wholly owned subsidiary of Italian energy investment firm Mareterra Group Holding, in January 2023. Industry players, however, said that due to the sanctions, Nayara's valuation could come down, making it an attractive asset for international buyers. New Strategies Global roadblocks have forced Nayara Energy to look inwards. Last week, it reached out to state-run refiners, offering them its export volumes of petrol and diesel to prevent a build-up of unsold inventory. While the pivot to domestic markets offers near-term relief, it also squeezes margins. Export markets, especially Europe, historically offered better realisations. Domestic competition, more so from state-owned oil marketing companies, limits pricing power and flexibility. Ironically, all of this comes at a time when Nayara Energy was planning massive growth investments. It had announced plans to invest over ₹70,000 crore in the long term across petrochemicals, ethanol plants and marketing infrastructure expansion, among other projects. It had invested over ₹14,000 crore since August 2017 in various projects in India, including upgrading existing refining facilities, a new petrochemical plant and other infrastructure projects. But thanks to the sanctions, the company now risks losing technical support from European technology licensors, which is crucial to its refinery operations. The key question is whether Nayara can continue to push forward on diversification while its core refining-export engine sputters under the weight of western pressure.
