Russian Federation Interest Rate

The Bank of Russia held its key interest rate at the record high of 21% in its March 2025 decision, in line with expectations, and signaled that it is unlikely that further tightening is needed for disinflation. The bank stated that inflationary pressures remain high as demand continues to outstrip domestic capacity, but pro-inflationary risks have subsided since the previous meeting. The stance contrasts with the hawkish tone this year when the CBR held its rate despite pledge of hikes, after Governor Nabiullina met with President Putin and business leaders, who had vocally opposed high borrowing costs. This was underpinned by a slowdown in observable inflation expectations amid the surge in the ruble this month, largely due to signals that the US may restore economic relations with Russia. The impact of a stronger currency prevailed despite a rebound in growth and record-low unemployment rates, as Putin’s military mobilization triggered a diaspora of working-aged men.