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Putin’s $3 Billion Gift for Pensions Seen Clinching Rate Cut

  • Stronger case for monetary easing in September, economists say
  • Russia offers one-time pension payment instead of adjustment
President of Russian Federation Vladimir Putin.

President of Russian Federation Vladimir Putin.

Photographer: Vatican Pool/Getty Images
Updated on

President Vladimir Putin’s government is tempting the Bank of Russia to cut interest rates.

This week’s announcement to spend more than 200 billion rubles ($3 billion) on a one-time January payment to pensioners, rather than proceed with a possible second increase this year in monthly retirement benefits, is set to help keep inflation in check, at least for now. That may give policy makers the confidence to reduce borrowing costs for the second time in 2016 when they meet on Sept. 16, according to Bank of America Corp., Raiffeisenbank JSC and Rosbank PJSC.