‘There was a more significant crackdown on monetary and credit terms’: the Central Bank keeps the key rate

The Bank of Russia kept the key rate at 21%, which was set this October.

The current level of the key rate was maintained despite the fact that they started talking about raising it immediately after the previous board meeting. Then Elvira Nabiullina, the head of the Central Bank, allowed for an increase of two percentage points this December. She clarified that this would depend on a combination of factors, including the rate of inflation.

“There was a more significant tightening of monetary conditions than the October decision on the key rate assumed. This was facilitated by factors independent of monetary policy. According to the Bank of Russia, given the significant growth of interest rates for end borrowers and the cooling of credit activity, the achieved tightness of monetary conditions creates the necessary preconditions for resuming the disinflation process and returning inflation to the target, despite the increased current growth in prices and high domestic demand. The Bank of Russia will assess the advisability of raising the key rate at the next meeting, taking into account the further dynamics of lending and inflation. According to the Bank of Russia's forecast, given the current monetary policy, annual inflation will decrease to 4.0% in 2026 and will remain on target in the future,” the Central Bank said in a statement last week.

Earlier, during a combined online press conference, Russian President Vladimir Putin, assessing the fight against inflation, noted that the Central Bank could act more effectively and promptly using tools not related to raising the key rate. According to him, Elvira Nabiullina does not tell him what the key rate will be tomorrow and probably does not know herself. Decisions are made by the Central Bank's board of directors. “I expect that tomorrow's decision on the key rate will be well-considered,” he emphasised.

The next meeting of the Bank of Russia's board of directors on the key rate is scheduled for February 14, 2025.

Realnoe Vremya publishes the chronology of the key rate dynamics since February 2022:

• 28 February 2022 — increase from 9.5% to 20% a year;
• 11 April 2022 — decrease from 20% to 17% a year;
• 29 April 2022 — decrease from 17% to 14% a year;
• 27 May 2022 — decrease from 14% to 11% a year;
• 10 June 2022 — decrease from 11% to 9.5% a year;
• 21 July 2022 — decrease from 9.5% to 8% a year;
• 16 September 2022 — decrease from 8% to 7.5% a year;
• 21 July 2023 — increase from 7.5% to 8.5% a year;
• 15 August 2023 — increase from 8.5% to 12% a year;
• 15 September 2023 — increase from 12% to 13% a year;
• 17 October 2023 — increase from 13% to 15% a year;
• 15 December 2023 — increase from 15% to 16% a year;
• 26 July 2024 — increase from 16% to 18% a year;
• 13 September 2024 — increase from 18% to 19% a year.
• 25 October 2024 — increase from 19% to 21% a year (record high).