0740GMT//Russia cuts interest rates for first time in three years; Musk's dad flies into Moscow
INTEREST RATE CUT: Russia's Central Bank cut its core interest rate for the first time in three years on Friday to 20% from 21%. (COMMENT: this interest rate cut decision, while not unexpected, went against a poll of economists in the Vedomosti newspaper. The strong rouble and pressure from Russian businesses triggered the rate cut. The last time the Russian Central Bank lowered its key interest rate was in Sept. 2022 when it was cut to 7.5% from 8%. The Central Bank's next interest rate meeting is scheduled for July 25.)
In its statement accompanying the rate cut, the Central Bank said that it intended to keep a tight monetary policy focused on keeping inflation under control until 2026. (COMMENT: This reduces the likelihood of another interest rate cut any time soon.)
It also said that inflation in Q1 2025 measured 6.2%, down from 8.2% during the same period in 2024. (COMMENT: This is the "seasonally adjusted" figure. Core inflation, according to economists, slowed but is still running at 9.8%.)
This diagram breaks down the key issues in the news story on Russia cutting interest rates. The interest rate cut is graded as 'slightly surprising' because Russian economists had said that the Central Bank was likely to avoid it. Arguably, the Central Bank's statement that it will focus on dampening inflation (which is easing, slightly) is more important. This was not a surprise.
PRISONER EXCHANGE: Russia said on Saturday that Ukraine had unexpectedly postponed the exchange of 6,000 bodies of soldiers killed in the war and badly injured prisoners under the age of 25. (COMMENT: This was supposed to be the biggest exchange since the start of the war and was really the only concrete deal made in peace talks in Istanbul last week. Ukraine countered that it was preparing for the exchange this week.)
MISSILE/DRONE STRIKE: Russia launched a massive "retaliatory" strike against Kharkiv in Ukraine for the drone strike against strategic bombers last week. The US later said that it didn't think that this strike was the culmination of Russia's retaliation.
MUSK'S FATHER IN MOSCOW: Kremlin-backed officials are hosting the father of Elon Musk at a forum in Moscow. Errol Musk, a 79-year-old South African businessman, is participating in the "Forum of the Future 20250" which is being organised by Alexander Dugin. Dugin is a right-wing philosopher who supports Putin's war in Ukraine. (COMMENT: This is the Kremlin stirring trouble. Musk and his father are reported to have a strained relationship but this is still the Kremlin making headlines, sowing doubt and dissent.)
CORRUPTION: Police in Russia arrested the mayor of Krasnoyarsk, Vladislav Loginov, for corruption. (COMMENT: Even for the regular grind of arrests in Russia for corruption, this is a sizable one. Russia is riddled with corruption, including at senior official levels.)
NIGHTCLUB RAID: Russian police raided the Three Monkeys nightclub in Moscow as part of their supposed clampdown on LGBT propaganda. (COMMENT: Police raided the same nightclub in October. The feeling is that the Russian state uses the excuse of cracking down on 'LGBT propaganda', banned in 2023, to harass nightclubs and their patrons. The Kremlin considers nightclub goers as mainly soft liberals with sympathies for Ukraine and the West, rather than for its hardcore nationalist agenda.)
LENIN STATUE: Kyrgyzstan has demolished the tallest statue of Lenin in Central Asia. The 25m high statue was erected in Osh, in the south of the country in 1975. In its place, Kyrgyz officials will erect a national flag. (COMMENT: There are a dwindling number of statues of Lenin left in Central Asia and this giant statue always felt like it was on the chopping block. While there has been a resurgence of Stalin statues and platitudes in Russia linked to his defeat of Nazi Germany in WW2, there hasn't been the same push for more Lenin statues. A reaction from the Kremlin is unlikely.)
WAGNER QUITS MALI: The Kremlin's Wagner mercenary group has quit Mali, a Russian official told the AFP news agency. Instead, Russia's operations in Mali will be run by Africa Corps, a unit attached to Russia's Ministry of Defence. (COMMENT: The Wagner brand has lingered on in Africa despite the death of its leader Yevgeny Prigozhin in 2023 after a failed mutiny in Russia. The Kremlin has placed importance on boosting its outreach in Western Africa through proxies but Wagner's reputation in the region was dealt a major blow last year after one of its convoys was wiped out in the Sahara Desert by rebel fighters.)
NEWS MATRIX:
The two most important stories from Russia since Friday have been the interest rate cut and a reported delay to a prisoner swap. The interest rate cut is significant – and marginally surprising as it went against a poll of economists.