The Central Bank maintained the key rate at 21%

Explaining the decision to keep the interest rate at the same level, the Central Bank said that the tightening of monetary conditions in Russia turned out to be more significant than expected in the October decision.

“This was facilitated by factors independent of monetary policy. According to the Bank of Russia, taking into account the significant increase in interest rates for final borrowers and the cooling of credit activity, the achieved rigidity of monetary conditions creates the necessary preconditions for resuming the disinflation process and returning the inflation to the target,” explained the regulator’s press service.

They noted that inflation expectations continue to rise, so “current price growth will remain elevated for some time,” but in the coming months, “inflationary pressure will begin to ease under the influence of tight monetary conditions and a slowdown.” of credit”.

Most economists surveyed by RB.RU expected the Central Bank to increase the interest rate to 23%. The chief economist of Banco Alfa, Natalia Orlova, admitted that the rate will immediately rise to 25%. “It is now clear that annual inflation, in my opinion, will approach 10%. “This suggests there should be a similar adjustment in the rate,” he said. But he added that the regulator should take into account “the sentiment of the real sector.”

When making a decision on the rate, the Central Bank leadership “walks a very fine line”: easing the policy threatens to accelerate inflation and collapse the ruble, but tightening it could lead to a recession and increase the number of bankruptcies among companies that will not be able to pay their debts, Bloomberg noted. In October, the International Monetary Fund revised its growth forecast for the Russian economy for 2025, lowering the estimate from 1.5% to 1.3%.

Discontent with the Bank of Russia’s policies has been growing in recent months. According to Bloomberg, Prime Minister Mikhail Mishustin previously complained about Nabiullina to Vladimir Putin, saying the regulator’s actions hinder the government’s efforts to support the economy under sanctions.

Sources from agencies close to the Kremlin claim that other officials, bankers and business executives who were dissatisfied with the course chosen by the Central Bank also approached the president. Putin himself has not yet considered the possibility of removing Nabiullina from the position of head of the Central Bank, considering that she makes the necessary decisions to support the Russian economy, Bloomberg indicated.

Under current conditions, the Bank of Russia can move to lowering rates no earlier than mid-2025, Orlova noted in a conversation with RB.RU. 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 expert.

Speaking in the State Duma on November 19, Nabiullina stated that the main conditions for reducing the rate would be a slowdown in inflation and the absence of new economic shocks. He noted that the key rate effectively counteracts inflation. “If we had left the official interest rate at last year’s level, then inflation would now have reached 20-30%, and possibly higher,” the president of the Central Bank stressed.