Russia's economic landscape witnessed significant changes throughout 2024, marked by a notable expansion in enterprises' production capabilities. Despite these advancements, supply struggled to meet the increasing demand. In response to these dynamics, the Bank of Russia focused on controlling price hikes to prevent inflation from heavily impacting households and escalating business expenses. This objective was highlighted by Governor Elvira Nabiullina in the institution's Annual Report.
In an effort to curb inflation and stabilize the economy by 2025, the Bank of Russia decided to increase the key interest rate to 21% per annum in 2024. "The first months of 2025 suggest that the economy is gradually restoring this balance. Price growth is decelerating, while the economy is still growing, although at a more moderate pace. In other words, production capacities continue to expand, while the increase in demand is becoming more balanced, without provoking a further acceleration of inflation and depreciation of the ruble," Nabiullina explained.
Aiming for a gradual return to target inflation levels, the bank expects this shift to invigorate the economy and safeguard personal incomes. Despite international sanctions, the banking sector has played a pivotal role in economic progress, particularly in vital industries. Banks have managed to facilitate cross-border transactions and maintain lending activities. However, Governor Nabiullina noted that funding through bank lending isn't the sole avenue, emphasizing the capital market as an alternative. The Bank of Russia, in collaboration with the government, seeks to foster an environment conducive to initial public offerings.
"The Bank of Russia’s activity is dedicated to two closely related objectives which are to protect households’ incomes and foster conditions for sustainable growth of the economy. This is only possible with low inflation, a reliable banking system, and a well-developed financial market where people’s rights are properly protected," Nabiullina emphasized.
The Annual Report, detailing the Bank of Russia's operational outcomes and financial documents, concurrently introduced an abridged version for the public titled "The Bank of Russia’s Work: Results in Brief for 2024."