Russian Central Bank Holds Interest Rate at 21%, Defying Expectations

The decision reflects concerns about inflation and economic overheating, despite criticism from business leaders over high borrowing costs.

The Russian central bank unexpectedly kept its key interest rate at 21%, contrary to market expectations of a hike to 23%.
Governor Elvira Nabiullina emphasized that tightened monetary conditions have begun to slow inflation and credit growth, creating conditions for disinflation.
Inflation currently stands at 9.5%, more than double the central bank's 4% target, driven by military spending, labor shortages, and a weakened ruble.
Business leaders and political figures have criticized the high rates, arguing they stifle investment and economic activity, with some suggesting political pressures influenced the decision.
The central bank stated it will reassess the need for a rate hike at its February 2025 meeting, aiming for inflation to reach 4% by 2026.