Alfa Bank’s chief economist allowed the Central Bank’s key rate to rise to 25%

“I think it would be good if the Central Bank could raise the rate to 25%. Because inflation is accelerating. At the end of October, the Central Bank did not rule out an increase to 23%, but then the inflation target was 8-8.5%. It is now clear that annual inflation, in my opinion, will approach 10%. This suggests that there should be a similar adjustment in the tariff,” Orlova noted.

At the same time, he admitted that high rates have a negative impact on small businesses, which find it more difficult to attract financing. “For those companies that relatively recently started using leverage, such a long period of high rates became a test in the financial sense,” the economist noted.

In his opinion, the Central Bank will have to take into account “the sentiment of the real sector” when making a decision on monetary policy, so “it cannot be ruled out that the rate will only rise to 23% or 24%.” “. ”

The Bank of Russia could adopt lower rates no earlier than mid-2025, says Orlova. To do this, the regulator will have to ensure that “inflation has at least stabilized”, but in the meantime, according to this indicator, “our trajectory is getting worse,” said the chief economist of Alfa Bank.

In a meeting on October 25, the Central Bank raised the key rate by 200 bp, to 21% annually, updating the maximum of February 2022, when the rate was 20% annually. At the same time, the Central Bank allowed another rate increase at the next meeting.

On November 19, the President of the Bank of Russia, Elvira Nabiullina, upon entering the State Duma, stated that the main conditions for making the regulator’s policy more flexible would be a slowdown in inflation and the absence of new economic shocks. The head of the Central Bank assured the deputies that the reference interest rate effectively counteracts inflation.