Russian central bank keeps rates on hold after Putin's call for 'balance'

Record ID: 1891130

  • Title: Russian central bank keeps rates on hold after Putin's call for 'balance'
  • Date: 20th December 2024
  • Summary: Prosecutors expect to charge the suspected driver in a car-ramming at a Christmas market in Germany with murder and attempted murder, the head of the local prosecutor's office said on Saturday (December 21). The motive for the attack remains unclear but the suspect's dissatisfaction with Germany's treatment of Saudi refugees may have played a role, the prosecutor in the ce
  • Embargoed: 3rd January 2025 14:00
  • Keywords: CENBANK NABIULLINA PUTIN RATES RUSSIA
  • Location: MOSCOW, RUSSIA
  • City: MOSCOW, RUSSIA
  • Country: Russia
  • Topics: Europe,Government/Politics
  • Reuters ID: LVA007859120122024RP1
  • Aspect Ratio: 16:9
  • Story Text: The Russian central bank kept its key interest rate on hold at 21% on Friday (December 20), surprising the market, which had expected a 2 percentage point increase, and saying recent tightening had created conditions for inflation to fall towards its target.
    The decision came a day after President Vladimir Putin in a nationwide phone-in publicly called for a "balanced" decision from the bank, which is having to manage the inflationary effects of the militarisation of the economy due to the conflict in Ukraine.
    Powerful business leaders had complained that soaring rates were stifling investment, but 23 of 27 economists in a Reuters poll had still expected a hike to 23%.
    "Given the notable increase in interest rates for borrowers and the cooling of credit activity, the achieved tightness of monetary conditions creates the necessary prerequisites for resuming disinflation processes and returning inflation to target," the central bank said in a statement.
    Inflation stands at 9.5%, far above the 4% target. But the central bank said its tightening had already slowed lending and dampened demand, and that it would assess the need for a hike at its next meeting on Feb. 14.
    The central bank is independent by law, and Putin has given governor Elvira Nabiullina a free hand in the past, but analysts said the pressure from business had become too strong to ignore.
    "The pressure ... worked, and the central bank decided to stop," said economist Evgeny Kogan. The current rate is still the highest since the early years of Putin's rule, when Russia was recovering from the economic chaos of the 1990s.
    For her part, Nabiullina denied caving in.
    "Criticism of our policy intensifies during periods of high rates and rate hike cycles," she said. "We make decisions based on our assessment of the situation and our forecast."
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