Russia Holds Key Interest Rate As Expected
2025-04-20
3928
(fxcue news) - The Bank of Russia left its interest rate unchanged as widely expected on Friday, despite high inflationary pressures.
The board of directors, governed by Elvira Nabiullina, maintained the key interest rate at a record high 21.00 percent.
The Russian central bank has raised the key interest rate by 1,350 basis points since July 2023.
"The Bank of Russia will maintain monetary conditions as tight as necessary to return inflation to the target in 2026," the bank said in the policy statement.
The bank suggested that the monetary policy will remain tight for a long period.
According to the baseline scenario, the average key rate is expected to be in the range of 19.5-21.5 percent per annum in 2025 and 13.0-14.0 percent per annum in 2026.
Given the monetary policy stance, annual inflation is projected to fall to 7.0-8.0 percent this year and return to 4.0 percent in 2026 and stay at the target further on.
Although the impact of tight monetary conditions on demand is becoming increasingly evident in easing inflationary pressures, it is premature to say that the current trends are sustainable.
Policymakers observed that inflation expectations remained elevated and it prevented inflation from falling more rapidly.
The board noted that the balance of inflation risks is tilted to the upside. A further decline in the global growth along with oil prices in case of escalating trade tensions would have proinflationary effects through the currency exchange rate dynamics, the bank said.
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