Central Bank of Russia Keeps Interest Rate Unchanged

In a significant move, the Central Bank of the Russian Federation (CBR) has decided to keep its key interest rate steady at 21% per annum. This decision marks the second consecutive time the rate has remained unchanged, signaling a cautious approach to monetary policy amidst fluctuating economic indicators.

Inflation and Economic Growth Projections

The bank projects a decrease in the annual inflation rate to between 7% and 8% by 2025, with a further reduction to the target of 4% by 2026. The CBR highlighted the tight labor market and its record lows as foundational for the economy's gradual return to balanced growth. The Russian economy saw a 4.1% expansion in 2024, largely driven by a surge in domestic demand.

Future Policy Directions

Looking ahead, the CBR plans to evaluate the necessity of a key rate increase in its next meeting. This evaluation will consider the pace and sustainability of the inflation slowdown, indicating a flexible approach to future monetary policy adjustments.