Russia’s central bank is planning to start cutting interest rates in 2025, according to Governor Elvira Nabiullina’s recent remarks in the State Duma. The bank has been maintaining a tight monetary policy to curb persistent inflation, which has remained high for four years. Nabiullina expects inflation to drop to 4% to 4.5% by next year, with long-term stabilization at around 4%, barring any external shocks. The decision to gradually lower rates will depend on the economic situation, as inflation comes under control. The bank recently raised its policy rate to a historic 21% to manage price increases, but Nabiullina stated that Russia’s low unemployment rate of 2.4% and the lack of workers in many industries suggest that the current high rates are also stifling production. The central bank aims to prevent stagflation by continuing its cautious monetary stance while considering gradual rate reductions if inflation remains in check.
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