Bank of Russia Maintains Key Rate at 21% to Combat Inflation

The Bank of Russia has decided to keep its key interest rate unchanged at 21%, a move aimed at tightening monetary conditions to steer inflation back to its 4% target by 2026. This decision comes as the central bank forecasts inflation to hover between 7% and 8% in 2025, mirroring last month's projections, with an average inflation rate of 8.3% observed in the first quarter.

Inflationary Pressures Expected to Ease, But Challenges Remain

Officials anticipate a gradual decline in inflationary pressures in the upcoming months. However, they caution that elevated inflation expectations and a domestic demand that continues to outpace supply capabilities are significant hurdles to achieving a quicker reduction in inflation rates. Despite these challenges, the economy shows signs of slowly moving towards a more balanced growth trajectory.