“There is no point in talking about size.” What Nabiullina said after raising the key rate to a record level

• The rate increase is necessary to return inflation to the target (4%) and reduce inflation expectations. According to Nabiullina, The regulator currently sees no signs of inflation slowing: In September, price growth accelerated and core inflation exceeded 9%.

  At the same time, the reaction of inflation to the increase in the key rate “became less pronounced.” “Inflation has been above the target level for four years now. The more inflation deviates from the target, the less the population and companies believe in its return to low levels, and this is reflected in their behavior,” Nabiullina explained.

• At a meeting on October 25, the Central Bank chose between three options: raising the key rate to 20%, 21% or higher. It was not considered to maintain the indicator at 19%.

  According to Nabiullina, at the next meeting on December 20 the rate may increase further. When asked about the maximum point of the key type, Nabiullina replied that “there is no such point, so it makes no sense to talk about its size.”

• Overheating of the Russian economy turned out to be stronger than the Central Bank’s forecast, causing an accelerated increase in prices. “Our forecast assumed a rate cut following slowing inflation, but many interpreted that to mean we would cut rates anyway. And this motivated people and companies not to reduce the demand for loans,” Nabiullina said.

  He promised that in the future the Central Bank “will react even more conservatively to pro-inflationary risks.”

• Central Bank ready to start easing policyYes, “we see a fairly significant slowdown in sustainable inflation,” but “we cannot say now when this will happen,” said the head of the regulator. According to the forecast of the Bank of Russia, the average interest rate in 2025 will be 17-20%, in 2026 12-13% and in 2027 7.5-8.5%. Nabiullina indicated that he hopes to reach the inflation target in the first half of 2026.
• Increase car recycling collection (from October 1, increased by 70 to 85%) will have a “notable” impact on inflation rates, Nabiullina noted. “Taking into account the great weight of passenger cars in consumer spending (4.6%), this will have a notable impact on inflation,” emphasized the head of the Central Bank.

What else did the head of the Central Bank say?

• The regulator does not observe a significant slowdown in credit activity in the country; the high growth is mainly due to the corporate segment;

• The problem of personnel shortages in Russia has worsened. In addition, domestic companies are increasingly facing “logistics bottlenecks and increasing complexity of supply chains.”

• The Central Bank sees the beginning of a fall in housing prices in the primary market in some regions of the country. According to the regulator, Russians have begun to buy real estate more often with their own savings.