Bank of Russia lists terms for interest rate cuts

(MENAFN) The head of Russia’s central bank, Elvira Nabiullina, stated on Tuesday that the bank may begin gradually lowering its key interest rate in 2025, provided inflation decreases towards the target level and the economy does not face any new external challenges. In October, the Bank of Russia raised its key interest rate to a record 21%, due to persistent inflation exceeding the bank’s previous forecast of 6.5-7.0% for the year. At that time, Nabiullina acknowledged that inflation was expected to be double the target of 4% and emphasized the bank’s commitment to reducing it.

During a session at the State Duma, Nabiullina explained that high corporate lending growth is a major factor for maintaining a tight monetary policy amid inflation. She projected that inflation would fall to 4.5-5% in the coming year, and then stabilize near 4%. Once inflation slows, the central bank may begin lowering the interest rate, assuming no new external shocks.

She noted that while credit activity has been slowing due to higher interest rates, some sectors, including large borrowers, continue to take out loans. Despite this, Nabiullina expects corporate lending growth to further decline, which should help lower inflation and ultimately show that the bank’s monetary policy has effectively curbed price increases.

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