Bank of Russia Maintains Key Rates Amid Inflation Concerns

The Bank of Russia has decided to keep its key interest rates unchanged at 21%, as announced this Friday. This decision underscores the bank's commitment to maintaining tight monetary conditions to achieve its inflation target of 4% by 2026.

Inflation Forecast and Economic Outlook

The inflation rate forecast for 2025 remains consistent with last month's projections, hovering between 7% and 8%. The first quarter saw an average inflation rate of 8.3%, highlighting the ongoing challenges in controlling price levels.

Declining Inflationary Pressures vs. Elevated Expectations

While the central bank anticipates a gradual decline in inflationary pressures in the upcoming months, it also notes that inflation expectations among the public remain high. This situation complicates efforts to reduce inflation more swiftly.

Supply and Demand Dynamics

The bank highlighted that the growth in domestic demand continues to significantly outpace the expansion of goods and services supply. However, there are signs that the economy is slowly moving towards a more balanced growth trajectory.