Bank of Russia Maintains Key Rates at 21%

In a move that underscores its commitment to combating inflation, the Bank of Russia announced on Friday that it is keeping its key interest rates unchanged at 21%. The decision reflects the bank's strategy to maintain tight monetary conditions, aiming to bring inflation down to its 4% target by 2026.

Inflation Forecasts and Economic Outlook

The central bank's inflation rate forecast for 2025 remains unchanged from last month, projected to be between 7% and 8%. This comes after inflation averaged 8.3% in the first quarter. Despite expectations of declining inflationary pressures in the coming months, the bank highlighted that inflation expectations are still high, slowing the pace of decrease.

Economic Growth and Demand

The Bank of Russia also pointed out that while the economy is on a path to balanced growth, domestic demand continues to grow significantly faster than the capacity to expand the supply of goods and services. This imbalance presents ongoing challenges to achieving stable economic growth.