The Bank of Russia kept its key interest rate at a record high of 21% in its February 2025 decision, as expected, stating that it needs further price data to determine whether a rate hike may be necessary next month.
Bank of Russia holds rate at 21%
The central bank reiterated that inflationary pressures remain elevated and demand continues to exceed domestic capacity, consistent with its previous stance. This decision follows an earlier indication of possible hikes after CBR Governor Nabiullina met with President Putin and business leaders, who strongly opposed high borrowing costs.
Consumer inflation expectations continue to rise
The CBR also noted that consumer inflation expectations continued to rise despite record-high interest rates, driven by stronger-than-expected economic growth and historically low unemployment. The latter has been exacerbated by Putin’s military mobilization, which led to an exodus of working-age men. Recent inflation data showed annual price growth reaching 10% in early February.
