Russia’s Central Bank Governor Elvira Nabiullina said Wednesday the bank would likely raise the key interest rate this month, but the decision is not predetermined due to a recent slowdown in loans.
The regulator raised its key rate to a record-high 21% in October and said there was a “very high probability” of another increase at its Dec. 20 meeting.
“We’ve signaled that the Central Bank allows for the possibility of raising the rate, but I want to emphasize that it’s not predetermined,” Nabiullina said at an investment conference organized by Russia’s second-largest bank VTB.
She acknowledged a “new pro-inflationary factor” of the weakening ruble, which lost 15% of its value against the dollar last month.
But she said its impact could be offset by a recent slowdown in lending.
“Of course we’ll take this factor into account, we’ll get more new data before the board meeting,” Nabiullina said at the conference.
VTB CEO Andrei Kostin said this week that the Central Bank’s tight monetary policy has reduced its loan portfolio and profit expectations.
“The slowdown in corporate and general lending will be followed by a slowdown in the money supply, which will eventually have a lagging effect on inflation,” Nabiullina said. “We’ll also take these lags into account.”
Nabiullina said she expects inflation to slow down in 2025 and reach the bank’s target rate of 4% in 2026.
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