Russia Maintains Key Interest Rate at 21% Per Annum

Evaluation of the Need for Interest Rate Hike at the Next Meeting

The Central Bank of Russia has maintained its key interest rate at 21% per annum.

Russian Ruble. Yonhap News

According to TASS news agency on the 20th (local time), the Central Bank of Russia announced that it would keep the key interest rate at 21% per annum but will assess the necessity of a rate hike at the next meeting. The Central Bank of Russia explained, "Monetary conditions have become tighter than expected at the time of the interest rate decision in October," adding, "This is due to effects caused by independent factors in monetary policy."

It continued, "With loan interest rates rising significantly and credit activity cooling down, monetary conditions have tightened, leading to a process where inflation is easing again despite current price increases and high domestic demand. This has created the necessary prerequisites to bring inflation back to the target."

Previously, experts predicted that Russia would significantly raise its key interest rate. Russian media outlet RBC reported that most economic analysts expected Russia's key interest rate to rise to 23% per annum or higher.

Russia has pursued a policy of raising the key interest rate to curb inflation after prices rose due to increased government spending on the 'special military operation' in Ukraine.

The Central Bank of Russia has continuously raised the key interest rate since July last year, when it increased from 7.5% to 8.5%. In October, it raised the rate by 2 percentage points from 19% to 21% per annum.

Although the rate was frozen this time, 21% per annum remains the highest level ever for Russia's key interest rate. The previous record was 20% per annum, set immediately after the start of the special military operation in Ukraine in February 2022.