Russian central bank plans to start rate cuts in 2025

​​​​​​​By Emre Gurkan Abay

MOSCOW (AA) - Russia’s central bank plans to start rate cuts in 2025, as governor Elvira Nabiullina said Tuesday at the State Duma, or lower house of parliament.

Nabiullina said the bank has been implementing a tight monetary policy to stop price increases with inflation being high for a fourth straight year.

She highlighted that the monetary policy would reduce inflation to 4% to 4.5% next year and she expects it to stabilize at 4% down the line, and so long as no external shocks are felt, the bank will consider issuing gradual reductions next year.

Nabiullina noted that Russia’s unemployment rate fell to 2.4% while 73% of enterprises report a lack of employment, which affects production, coupled with the high interest rate.

She noted that the Bank of Russia may avoid stagflation risk if it continues to follow a robust monetary policy eliminating any risks.

Russia’s central bank raised its policy rate by 200 basis points to 21% on Oct. 25, reaching an all-time high, signaling that additional rate hikes could be on the horizon.

*Writing by Emir Yildirim in Istanbul