Central Bank Commentary Signals Possible Path for Rates in 2025
The roadmap for future rate moves hinges on how the financial markets evolve. This was the core message delivered at a press breakfast by Rustem Mardanov, a member of the Bank of Russia’s Board of Directors, according to a correspondent from socialbites.ca.
Mardanov recalled that the last step up in the policy rate to 16 percent occurred in December 2023. He added that the journey of rate increases has not yet ended everywhere. In several lending institutions, rate adjustments continue to occur in a measured, periodic fashion.
He emphasized that the Bank will not overlook shifts in the market. Regarding further increases, the path will largely depend on how financial markets, especially price markets, behave in the coming months.
According to the board member, if inflation does not begin to ease, the Bank of Russia could keep raising the policy rate. In that scenario, deposits would also carry higher yields as financial institutions adjust to the tighter policy environment.
Conversely, if inflation stabilizes and trends downward toward the target range, a decline in key rates and deposit rates could follow. Mardanov described this scenario as the basic forecast for the year ahead, noting that the central bank would monitor inflation developments closely and respond accordingly.
The official pointed to a modest easing in inflation observed in December relative to November. He cautioned that it remains unclear whether this softening will persist, and stressed the importance of watching the trend over the next several months.
Overall, the central bank’s central projection remains that inflation will ease over time. The regulator intends to stay vigilant, ready to adjust policy as new data arrives and as financial conditions shift.
In addition, the bank is preparing to justify the extension of the compulsory sale rules for foreign exchange earnings. This measure is being considered as part of efforts to manage liquidity and support price stability in the economy.
Earlier commentary from economists suggested that Russians should rethink holding savings in dollars, given the evolving policy landscape. The evolving stance underscores the balance the central bank seeks between promoting financial stability and supporting growth as conditions change across the economy.