Bank of Russia Holds Rate at 21% After Putin's Call for Balance

Dec 20, 2024, 10:52 AM

The Bank of Russia has unexpectedly kept its key interest rate unchanged at 21%, defying market expectations of a hike to 23% amid rising inflation. Analysts had widely anticipated an increase to combat inflationary pressures, with inflation expected to reach 9.2% by year-end from the current 8.9%. Central Bank Governor Elvira Nabiullina, facing criticism from Russia's political and business elite, stated that without raising rates, inflation would have approached 30%. She indicated that the Central Bank may revisit the rate decision in February, considering either maintaining the current rate or increasing it further. President Vladimir Putin had called for a 'balanced' approach to interest rates, expressing hope that the Central Bank's decision would align with economic realities. Following the announcement, the Russian market rose. Nabiullina asserted that the decision aims to ensure a decrease in inflation in the coming quarters. The move comes despite calls from economists and market participants for higher rates to curb persistent inflation.