"Should decreases in inflation cease"...
In a press conference, Elvira Nabiullina, the charismatic head of the Central Bank of Russia, addressed concerns over inflation, stating, "With a cautious approach regarding rate cuts, pauses aren't off the table. If inflation takes a turn for the worse, a key rate hike could be on the horizon." With inflation still hanging around at 9.8% as of early June 2025[2], the situation seems fluid.
Nabiullina remains wary about any predetermined future rate cuts, noting, "Our decisions are closely tied to the evolving situation and the data we gather before the next rate-setting meeting." In a seeming bid to quell inflationary pressure, she went on to say that the bank's estimate for the average key rate this year remains within the range of 19.5-21.5%[1].
On June 6, 2025, the Bank of Russia lowered the key rate from 21% to 20%, a move aimed at addressing declining inflationary pressures[2]. Remaining vigilant, the bank has opted to keep a neutral stance, refraining from indicating the direction of future rate changes. "Our future decisions on the key rate will hinge on the rate of inflation decline and inflation expectations," the official statement read[2].
It's worth noting that while inflation is currently evolving near the lower end of the Central Bank's forecast[5], expectations for the year ahead aren't quite as optimistic, with inflation expectations reaching 13.4% in May 2025[4]. This incongruity between the projected inflation rates and consumer and business expectations underscores the challenges that lie ahead for the bank as it navigates this complex economic landscape.
Moscow, Natalia Petrova
© 2025, RIA "Novy Day"
Sources of Insights (Use sparingly):
- [1] Central Bank of Russia (CBR) Forecast, April 2025.
- [2] Central Bank of Russia statement on key rate decision, June 6, 2025.
- [3] Inflation expectations for the year ahead, as of May 2025.
- [4] CBR rate cut response, June 6, 2025.
- [5] Elvira Nabiullina's statements, June 6, 2025.
The Bank of Russia's latest key rate adjustment, lowering it from 21% to 20%, was aimed at addressing declining inflationary pressures. However, inflation expectations for the year ahead remain pessimistic, with estimates reaching 13.4% in May 2025, highlighting challenges for the bank in managing finance and business expectations.
