On March 21, 2025, the Bank of Russia's Board of Directors decided to maintain the key rate at 21.00% per annum. Although current inflationary pressures have decreased, they remain high, particularly underlying ones. The growth in domestic demand continues to exceed the supply capacity for goods and services. Lending growth is subdued, and households show a strong propensity to save.
The Bank of Russia believes that maintaining tight monetary conditions is essential for returning inflation to its target by 2026. "Achieving the inflation target will require a long period of maintaining tight monetary conditions in the economy," stated the Bank. They will continue monitoring inflation trends and expectations closely and may consider raising the key rate if disinflation does not progress as needed.
The Bank forecasts that with the current monetary policy stance, annual inflation will decrease to 7.0–8.0% in 2025, return to 4.0% in 2026, and stabilize thereafter.
In January and February, seasonally adjusted price growth averaged an annualized rate of 9.1%, down from 12.0% in Q4 of 2024. Core inflation also showed a decline but less significantly than overall consumer prices due to strong domestic demand.
As of March 17, annual inflation was recorded at 10.2%. Inflation expectations among households and businesses are declining partly due to a stronger ruble since early this year; however, analysts have slightly increased their forecasts for inflation in 2026.
According to their baseline scenario, the Bank anticipates further declines in inflationary pressures supported by reduced lending activity and high savings rates among consumers.
Economic activity shows signs of moderation compared to late last year despite significant domestic demand fueled by rising household incomes and budget expenditures.
Unemployment remains low although there are signs of easing labor market tightness as fewer enterprises report labor shortages and some industries experience reduced labor demand.
Monetary conditions stay tight under existing policies despite nominal interest rates decreasing post-February meeting across most financial market segments; real-term decreases were less pronounced due to lower expected inflation levels.
Despite reductions in deposit rates recently observed high household deposits persist alongside moderate lending activities which have been impacted by elevated budget expenditures affecting corporate lending dynamics lately.
Over medium-term horizons pro-inflation risks remain higher due mainly ongoing economic imbalances coupled with elevated expectations amidst deteriorating external trade terms while potential disinflation could result from slower lending growth under continued tight monetary settings or improved geopolitical situations affecting external conditions positively instead
Fiscal policy normalization anticipated next year should exert disinflationary pressure according latest announcements though adjustments might become necessary depending on any future fiscal parameter changes encountered moving forward
The Bank plans release summary discussions held regarding key rate decisions come April second followed subsequent board meetings scheduled twenty-fifth same month alongside publication medium-term forecast press releases later day Moscow time
"Statement by Bank of Russia Governor Elvira Nabiullina following Board meeting on March twenty-first."