Page 40 - bne IntelliNews Russia OUTLOOK 2025

4.2 Monetary Policy
Between December 2023 and July this year interest rates in Russia were 16%. Since then, however, inflation has forced the regulator to repeatedly hike rates until they hit 21% in October, a post-Soviet record.
In a surprise decision, the board of the CBR at the final policy meeting of 2024 resolved to keep the key interest rate on hold at 21%, defying the almost universal expectation of a 200 bp hike due to stubborn inflation that reached 9.5% in mid-December, 90 bp higher than the CBR end-of-year forecast.
“The Bank explained its decision by the fact that credit growth was slowing, and that it had financial data unavailable to the market. On the one hand, the Bank is being cautious, and wants to avoid tightening monetary policy any more than necessary,” Prokopenko said. “On the other hand, it has faced a barrage of criticism from Russian business and lawmakers in recent months. It’s hard to imagine political pressure wasn’t a factor in [the] decision, which flew in the face of all predictions. This could end up undermining trust in the regulator.”
But that is not a given. In the last months of 2024, the CBR's decisions have not coincided with consensus forecasts: for example, in September and October, analysts underestimated the regulator's determination to raise the rate. But such a striking divergence from consensus as at the December meeting has never been seen.
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