MOSCOW (Reuters) – The Russian central bank kept its benchmark interest rate on hold at 21% at a board meeting on Friday as the rouble and stock market rallied after a telephone conversation between U.S. President Donald Trump and Russian President Vladimir Putin.
The central bank hiked the key rate to 21% last October to fight inflation, which reached 9.5% in 2024. The move prompted strong criticism from businesses, which complained that high interest rates are stifling the economy.
The central bank said in a statement that “given the monetary policy stance, annual inflation will decline to 7.0–8.0% in 2025, return to 4.0% in 2026 and stay at the target further on”.
“Over the medium-term horizon, the balance of inflation risks is still tilted to the upside,” the regulator said.
The rouble has strengthened by about 20% since the start of the year on market optimism about potential talks between Russia and the U.S. A stronger rouble will help the regulator contain inflation.
Russian Prime Minister Mikhail Mishustin told President Vladimir Putin last week that high inflation is the key challenge for the Russian economy in 2025 and it is important to contain it.
The decision to keep the rate on hold was in line with a Reuters poll of 24 analysts.
The regulator surprised markets at its last rate-setting meeting in December 2024 by unexpectedly keeping the key rate on hold, after raising it to the highest level since the early 2000s earlier in the year.
(Reporting by Elena Fabrichnaya and Gleb Bryanski; Editing by Sharon Singleton)
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