Statement by Bank of Russia Governor Elvira Nabiullina in follow-up to Board of Directors meeting on 25 April 2025
Good afternoon. Today, we have made the decision to keep the key rate at 21% per annum.
Price pressures have been easing gradually. We assume that this trend will continue and annual inflation will return to the target of 4% in 2026. Nevertheless, risks still exist. We need to maintain tight monetary conditions for a long period to bring inflation down. Our further moves will depend on how quickly and sustainably inflation will be decelerating.
I would now dwell on the reasons behind our today’s decision.
Firstly, inflation.
Its annual rate in March was slightly above 10%, while current price growth slowed down to about 7% in annualised terms. This level is still high and feels uncomfortable for both households and businesses. Nonetheless, owing to our monetary policy, disinflation will continue.
Today, price growth is decelerating unevenly across consumer product groups. In March, the growth rates of non-food prices declined below 2% in annualised terms, whereas those of food and service prices decreased less notably and are so far close to 10%. This dispersion may be explained by different time lags of the key rate impact on various consumer market segments. Compared to service and food prices, non-food prices react more quickly to key rate changes, which is because durables are more frequently purchased on credit. High interest rates have caused a reduction in the loan portfolio and the demand for credit. As a result, the rise in non-food prices has slowed down significantly. As regards services and food, their prices are less responsive to changes in consumer lending since the demand for them depends primarily on income dynamics. Furthermore, driven by higher incomes in recent years, the demand for services has been increasing faster than that for products, which also explains higher price growth rates in this group.
As long as the price growth deceleration is not equally significant across all groups of goods and services, it would now be premature to draw any conclusions as to how sustainable the slowdown in headline inflation is. As demand cools down, the variance in price dynamics across groups will be decreasing.
A high key rate is moderating inflation via several channels simultaneously. I have already spoken of the reduction in demand through higher loan rates. The deposit channel remains effective as well, encouraging savings. The third, foreign exchange channel is also contributing to the deceleration of inflation. Tight monetary policy contains the demand for imports and makes ruble assets more attractive. This contributed to the ruble strengthening in the first quarter of the year, which has been easing price pressures as well. All these are sustainable factors supporting disinflation. In addition, the exchange rate has been propped up by better sentiment in financial markets that has been improving since the beginning of the year. However, in contrast to tight monetary policy, this factor might turn out to be more short-term.
Despite the slowdown in current price growth, inflation expectations have barely changed since our meeting in March, while a further decrease in inflation expectations is critical to ensure sustainable disinflation.
Our inflation forecast remains unchanged. Prices will rise by
Secondly, the economy.
GDP continues to grow although at a more modest pace. This is proven by both statistics and a number of high-frequency indicators. In particular, companies participating in our monitoring now give more moderate estimates of the current output of goods and services.
After a certain acceleration in January, the growth of consumption has slowed down. Due to the time lags I have already mentioned, a slower rise in demand is more noticeable in the segment of durables but has not yet become that obvious in catering and tourism, for example.
Investment activity is close to the high levels recorded last year. The vast majority of businesses participating in our monitoring plan to maintain or increase the amount of their investment this year. This topic is covered in our Regional Economy report. Nonetheless, the growth rates of investment will be apparently declining, which is confirmed by certain leading indicators, such as the sales of trucks and agricultural machinery as well as the utilisation rates of transport infrastructure.
Staff shortages are still a factor constraining the expansion of investment. Nevertheless, our monitoring shows some signs of an easing in the labour market. First sign, a number of companies have been decreasing their demand for labour, which is accompanied by a reallocation of workforce to other companies or sectors. Yet, unemployment stays at record lows. Second sign, enterprises plan a more moderate indexation of wages than over the previous two years.
Thirdly, monetary conditions have remained nearly unchanged, ensuring the tightness needed to rein in inflation.
Yield curves in the money market and the government bond market have shifted upwards since our previous meeting. This is largely because market participants have revised their expectations about the key rate path upwards.
High-frequency data for March suggest a slight decrease in deposit and loan rates. It is worth emphasising that we not only track nominal interest rates but also analyse them taking into account inflation expectations. In the first quarter of the year, nominal rates and inflation expectations both declined. As a result, there was no notable change in price conditions.
In March, credit activity remained subdued. Mortgage and corporate lending expanded slightly, whereas unsecured consumer lending contracted. In March, we said that lending dynamics were significantly affected by budget spending. Today, we can see that the impact of this factor has weakened, but lending growth continues to be moderate. I would like to stress that modest dynamics in lending are associated with lower demand for credit rather than limited credit supply by banks. Banks have sufficient capital cushions. However, banks have decreased their risk appetite and, therefore, prefer a more conservative approach to selecting borrowers.
Households’ saving activity has remained high despite a certain decline in deposit rates.
Budget spending in March was closer to its seasonal norm. The expansion of money supply has slowed down, with its current growth rates being consistent with the goal of returning inflation to 4%.
Now, I would like to speak of external conditions and changes in our forecast.
Since our previous meeting, the revision of import tariffs by major economies has been the main issue. Our updated forecast assumes a slower expansion of the world economy. Lower global demand will drag down commodity prices. This is why we have adjusted the forecast crude oil price accordingly. We assume that it will be five US dollars per barrel lower this year. The forecast of exports has also been decreased somewhat. The dynamics of imports will be more modest as well amid tight monetary policy.
As to the forecast for the Russian economy, the developments are generally close to our February scenario. Our April forecast contains only minor revisions in relation to foreign trade.
As regards risks to the baseline scenario.
One of the main risks is a more considerable cooling in the world economy due to trade wars. It is not just about how significantly import tariffs will ultimately increase, but also about the persistent uncertainty in markets caused by these decisions. All this is complicating investment planning. If additional risks associated with tariffs materialise, crude oil prices are likely to drop further.
Moreover, there are still risks related to the labour market and inflation expectations. Inflation has been exceeding the target for the fourth consecutive year, and the mere fact of this causes increased inertia that prevents price growth rates from declining fast.
Disinflationary risks have barely changed since our previous meeting.
An essential factor notably influencing our decisions is fiscal policy. Our baseline forecast still assumes the return to the fiscal rule this year, which means that the budget policy will have a disinflationary effect. Taking into account the current developments in global markets, the Ministry of Finance notes that the fiscal rule might need adjustment. If the cut-off oil price is reduced, this might be an additional disinflationary factor. More importantly, such a revision will make the fiscal policy stance more robust in the long term in a scenario implying less favourable conditions in the global energy commodity market. I would like to stress that we always take into account any notable modification in fiscal policy and adjust our monetary policy accordingly.
Winding up, I would like to comment on our future decisions.
We will maintain tight monetary conditions for a long period. This is reflected in our forecast of the average key rate for this year that will be in the range of
Thank you for your attention.
Q&A for the Media
QUESTION from TASS:
Have you discussed a reduction in the key rate today? What arguments were there in favour of this option, and what options did you discuss?
Elvira NABIULLINA:
The broad consensus we had was that the key rate should be kept unchanged, and we focused on the nuances of the signal.
QUESTION from Fomag.ru:
This is a question about sustainability. How can we tell that the reduction in inflation is sustainable? What characteristics lead us to conclude that what we are seeing is indeed a sustainable decline?
Elvira NABIULLINA:
Some time ago, one a year ago, we identified the triggers that raise the question of rate reduction. Our view of such triggers is the same overall.
Clearly, we look at a wide range of factors and trends, but our primary focus is a truly sustainable decline in current inflation and steadily declining inflation expectations. At the time, we also noted slower consumer activity and consumer lending, a less tight labour market, and the absence of inflation drivers in the budget or external conditions.
Signs of sustainability are already emerging in these factors, but we have yet to become confident that these trends are steady enough. Admittedly, many processes seem more sustainable now than they were at the time of the last meeting.
QUESTION from Interfax:
Regarding foreign currency repatriation and sales of foreign currency revenues, which scenario did the Bank of Russia consider in its updated medium-term forecast? Did you factor in an executive order extending current requirements or one nullifying them?
Elvira NABIULLINA:
Frankly speaking, neither today nor previously have we treated the extension or non-extension of the executive order as a decision factor, since we do not think that it weighs in on the exchange rate. This is what we can see from reality.
No matter the changes to the requirements for mandatory sales of foreign currency revenues, domestic exporters sold up to 85% of foreign currency revenues on average last year. But they have sold about 90% of foreign currency revenues over the last two months, despite the much lower ratios of mandatory sale. This is why this factor was just not under consideration.
QUESTION from Vremya Press, Kamensk-Uralsky, Sverdlovsk Region:
As a downturn is emerging, the ECB has lowered rates for the seventh time since last June. The magnitude of reduction was 25 basis points, bringing the base rate to
This compares to the Bank of Russia’s key rate of 21%. Why is it that the US and European regulators are reducing their base rates to supply cheap money to domestic markets and to stimulate growth, but the Bank of Russia is raising its rate?
Elvira NABIULLINA:
The reason is that economic conditions in the US and Europe are radically different to those in Russia – for all the differences between the US and EU.
Their inflation is low and in the vicinity of
Many people probably remember the US in the early 1980s, when inflation was in double-digits and the US Fed raised the rate up to 20%.
There are also some lesser known examples. Before the euro area was created, Spain was hit with 25% inflation in the late 1970s and the policy rate exceeded 30%.
Another factor to mention is people having become accustomed to low inflation over the decades of low inflation policy in the US and the EU, with price leaps raising no fears. People understand that even despite one-off price hikes, the central bank will surely bring inflation back to target. This is what economists call ‘anchored inflation expectations’. This means that a surprise price jump does not prompt consumers to rush to stock up on goods for fear of rapidly rising prices, or to buy foreign currency. This is why central banks do not have to raise their policy rates so much to counter price spikes.
We are in a different situation: people are expecting rather high inflation. As recent measurements show, expected inflation is close to 13%. This calls for a tighter monetary policy, higher interest rates.
However, once sustainable inflation has declined and has remained low for a long time, our rates can become moderate enough.
QUESTION from Bitkogan project:
What is the change in the Bank of Russia’s confidence in the sustainable nature of ruble appreciation when compared with the previous Board meeting?
Elvira NABIULLINA:
True, our understanding has changed slightly when compared with the March meeting. We are now inclined to put a larger portion of the appreciation since the beginning of the year to the more sustainable factors that are primarily associated with tight monetary policy.
In this regard, a stronger ruble is part of disinflationary processes, moderating demand and a more attractive store of value.
However, we do not attribute all the ruble appreciation to monetary policy effects.
A certain contribution is being made by the geopolitical context, but it would be premature to speak of sustainable ruble appreciation on the back of these developments. This would take not only market expectations, but actual shifts.
Alexey ZABOTKIN:
Let me emphasise that the strengthening of the ruble is partially steady. However, there are mixed judgements as to which portion of this appreciation can be considered as steady and therefore driving further disinflation, and which should still be considered a temporary, one-off change.
QUESTION from RIA Novosti:
You said earlier that annual inflation in Russia would peak in April. Are we past this peak, in your opinion? If not, what is your updated forecast?
Elvira NABIULLINA:
Inflation can be measured in different ways. We chiefly look at price growth rates describing current inflationary pressures. From this point of view, we passed the peak in the fourth quarter. Price growth rates, seasonally adjusted, nearly halved in the first quarter from the fourth quarter.
However, we believe that annual inflation will swing to reduction in May.
A slight rise in inflation is possible in July. This would be driven by the indexation of housing and utility rates – essentially a regular inflation driver.
QUESTION from NTV’s Delovye Novosti:
First deputy CEO of VTB Dmitry Pyanov, in a continued metaphorical series, called the Central Bank the ‘Neglinnaya Street doctor’ and the 21% rate ‘experimental medicine’. What would be your medical diagnosis for the Russian economy?
Elvira NABIULLINA:
Clearly, this is a comparison. We ourselves sometimes use metaphors, but we should treat this comparison with a very important caveat: a high key rate, or tight monetary policy, is not an experimental but highly efficient and time-tested drug with a history of use in various conditions and in different countries. As it were, this is a prescription drug, and one that was successfully used and is being used by central banks across many countries.
But a delayed treatment or insufficient dosage can aggravate the patient’s condition. We often compare high inflation to a fever, and the medicine – a high key rate – helps cope with overheating demand. We can see signs of early decline in inflation. But the course of treatment must be brought to completion to avoid relapses.
QUESTION from Chechnya Today (Grozny):
In the Chechen Republic, food makes up a significant part of the consumer basket. Which instruments can the Bank of Russia use to reduce the volatility of food prices?
Elvira NABIULLINA:
This is definitely a very important issue. The food share of the consumer basket is quite high, and at 44% in the Chechen Republic it is higher than the country average of 35% (excluding alcohol).
Food prices, primarily for fruit and vegetables, are always marked by increased volatility. These swings are linked to the agricultural cycle and crops. After a good harvest, prices for food, especially fruit and vegetables, tend to grow more slowly than the overall price index. If the crops were not good in the year, food prices grow faster before new crops come in.
We – the Central Bank – have no influence over prices for individual products. Our instruments are meant to influence overall price trends. However, in an environment of low and predictable inflation, prices for certain goods change less frequently and by a smaller magnitude.
Our history shows that in the years of steadily moderate inflation (2017, 2018, 2019), the price difference for individual products was relatively small. However, in recent years, when inflation is high, this range has doubled. That is, an overall decline in inflation will stop food prices from changing as much as in the recent years of high inflation.
Markets for individual products including food can be influenced by the Government’s policies, and we can see that the Government is implementing these policies. They are meant to reduce costs and boost the supply of some goods and services. They include among others subsidies to farmers and food manufacturers, incentives for the construction of storage facilities, flexible regulation of utility rates, food export and import quotas.
QUESTION from Russia 24:
The Bank of Russia forecasts growth of
Elvira NABIULLINA:
We have just updated our forecast, and our estimate for GDP growth is left unchanged.
Why do we have these differences in our estimates? The Central Bank is probably always more conservative. Our view is premised on the goal of delivering on our target and reducing inflation to 4% even under a conservative scenario.
Our key difference from the Ministry of Economic Development is that they are more optimistic about exports, that is the terms of trade, and probably more optimistic in their estimates about the recent growth of the Russian economy. The potential of the Russian economy is growing as a result of large-scale investments in previous years. Yet it remains to be seen how much the economy has grown and how much of this translates into higher labour productivity.
If it is found to have grown above estimates, we have a disinflationary scenario, which comes quite close to that of the Ministry of Economic Development. It is one of the probable scenarios we are considering. Should it materialise (which is possible), inflation will indeed decelerate more rapidly and monetary easing will begin sooner than our baseline scenario suggests.
QUESTION from Rossiyskaya Gazeta:
The Bank of Russia has made macroprudential policy decisions. These decisions apply to mortgage, car, consumer and corporate loans. Could you please explain what effect these decisions will have on the market and what are the implications for consumers?
Elvira NABIULLINA:
We have indeed made such decisions, which extend to all areas including mortgages and unsecured loans, and we have made some adjustments. Overall, our policy is aimed at protecting consumer rights and preventing the accumulation of high-risk debt.
This is the first time we have set limits on mortgage loans, and they cover exactly the high-risk types of loans that frequently happen to be overdue. For other loan types, we have reduced macro add-ons.
Therefore, we expect our measures to make mortgage lending slightly more appealing for banks, and to make mortgages more affordable for households.
The limits on the high-risk loans in question come with safety margins. This means that banks will not have to tighten their requirements compared to the current level. Nonetheless, these limits were needed to prevent a further buildup of debt so that banks are unable to expand high-risk lending beginning from 1 July.
When setting limits for car loans, we took into account the loans being currently issued to overindebted borrowers, that is borrowers spending more than half their income on loan payments. This means no change for those wanting to buy a car.
However, in some cases, consumers take out loans secured by an existing car rather instead of taking out car loans as such. Banks have been increasingly extending loans to overindebted borrowers in such cases: 80% in 2024 Q2 vs 44% in 2025 Q1.
Accordingly, our measures are set to gradually improve the situation in this area. We believe that banks should not ‘overlend’ to borrowers against property that could be lost.
QUESTION from RBC:
Has the Bank of Russia seen the effects of new trade wars? What has been their impact on the Russian economy, and what are their likely consequences in the future, in your prediction?
Elvira NABIULLINA:
We are seeing a very dynamic situation. We will need to monitor the developments to see the ultimate level of import duties.
As I have said, we took into account the trade war factor in our forecast. We lowered the rates of global economic growth rates and slightly decreased our estimate for oil prices, considering that the main channel for the tariff wars to influence the Russian economy is a decline in prices for our key exports.
The rest of the effects are of a more limited nature given both the structure of our foreign trade and the restrictions on financial flows in force.
Alexey ZABOTKIN:
Clearly, the impact of the trade wars will greatly depend on the scale of protectionist measures and the resulting fragmentation of global trade. This is a factor of considerable uncertainty in our baseline forecast.
As things stand, the baseline forecast remains unchanged overall.
QUESTION from Rossiyskaya Gazeta (Primorye Territory):
As is well known, the world is now in the grip of the tariff war initiated by the US. There are reports that Chinese authorities are designing measures to stimulate the consumer market, in an effort to offset some of the losses induced by the US. In Japan, the government is offering a monetary compensation to all residents – also to increase consumer activity and simply help people persevere through rising prices. There are other examples. Why are such measures ruled out in Russia, is that for fear of an overheating?
Elvira NABIULLINA:
To a certain extent, this follows up on the previous question. The effects of trade wars vary across countries. This depends on the structure of foreign trade: whether the increase in US import duties directly affects the country, by how much the import duties are raised and whether the country is retaliating by raising its duties on US imports, that is, on the workings of its foreign trade.
If a country has exported many goods to the US, and the duties have made exports less profitable, exports will have to be redirected to foreign markets (which is not always possible) and the domestic market. This is the situation in China and some other countries.
That is why the government there is supporting domestic consumers so they are able to buy these goods. However, this support will not have an adverse effect on prices, although there may be pro-inflation consequences of a reciprocal increase in their own duties on US imports.
Russia’s case is different. Given insignificant Russian exports to the US, there is no need to incentivise domestic demand to offset the slump in external demand. The direct impact on us is minimal.
We will be affected indirectly, as I have already mentioned, and mainly through a weakening in global demand and lower global commodity prices. In contrast to Japan or China, this is nothing but an inflation risk for us.
Alexey ZABOTKIN:
As a reminder, China has seen near-zero or negative inflation for several quarters in a row, that is, they are actually dealing with the risk of deflation as demand is already subdued.
What we are dealing with is not fear of overheating, but demand having outpaced production capacities. This is clearly evidenced by 10% inflation, and we need to move it back to a lower level. This is why it us unreasonable to talk about a shortage of demand in our case.
QUESTION from Moskovsky Komsomolets:
With the holiday season approaching, many Russians are buying foreign currency or are planning to in the coming days. The US dollar exchange rate has dropped by over 20% since the beginning of the year. It is clear that the Bank of Russia does not present [exchange rate] forecasts, but perhaps you could give us an idea of what we should have in mind since past data for price growth are no longer relevant to understand the path of the exchange rate. Is that geopolitical statements, domestic policy, the rate of inflation, or any other actions by the Bank of Russia or financial authorities? Is right now the best time to buy foreign currency, or is it better to wait for a more favourable rate?
Elvira NABIULLINA:
Yes, exchange rate movements are affected by a number of factors. One of the most impactful factors is monetary policy. You have highlighted the other factors such as geopolitics and world trade wars.
Currently, the exchange rate is being affected by diverse factors: tight monetary policy, positive market sentiment and positive geopolitical expectations are all pushing the ruble upwards, while the global trade wars and oil prices are putting downward pressure on it. The percentage shares of this effect are difficult to measure. That is why sustainable strengthening of the ruble remains to be seen. There are both persistent and temporary factors at play.
To remind the experts who are discussing this, our exchange rate is floating. We do not make any exchange rate forecasts.
What should people go by? I think it is best, as always, to focus on common sense. I have to say that our people can take credit for that, and we can see that from how they behave in the foreign exchange market. Their behaviour in the foreign exchange market is absolutely rational and focused on their benefit, which economists term countercyclical behaviour.
QUESTION from Reuters:
Could you please clarify a point on the trade wars. While the Central Bank analyses mainly the risks of trade wars, the President yesterday spoke of the need to find opportunities in these trade wars for the Russian economy. What could these be? Based on how you view the steadiness of ruble appreciation, are there capital inflows into the Russian market, possibly from friendly countries, on the back of the interest rate differential?
Elvira NABIULLINA:
Just like in any challenging situation, we take note of risks, but there are also opportunities. Admittedly, our businesses have been good at taking advantage of such opportunities.
What trade wars entail is a change in potential market shares of different countries and companies. A change like this makes our business be even more active and adjust depending on the competitiveness of certain manufacturers. That was probably the point.
Now on to the second part of the capital inflow question. We answered questions last time about the more optimistic geopolitical expectations that could boost an inflow of capital into our market. We are not seeing significant capital flows now, at least at this point in time.
Alexey ZABOTKIN:
In a discussion about capital flows, the focus is mainly on foreign investors. But Russian investors also play a significant role in capital flows.
With high interest rates in the economy, including high and attractive ruble rates, Russian investors may adjust the structure of their portfolios, including the currency structure of their savings, to increase the share of ruble instruments. This is also a capital flow, in the opinion of Russian investors.
QUESTION from Frank Media:
Recently, central bank governors have increasingly been under pressure from politicians. One of the most illustrative examples now is US President Donald Trump’s tough rhetoric against the Fed. Some politicians in Russia also want the Central Bank to change its monetary policy. What risks does this pressure bring to global macroeconomic stability? Do you agree that this pressure has increased? How real is, in your opinion, the threat of central banks losing their independence?
Elvira NABIULLINA:
As for us, criticisms intensify when the rates are high, and this is no surprise. We will deliver on our objective, our mission, of inflation reduction.
Speaking of the global trend in general, we can indeed see increased criticism being directed at central banks in many countries. However, we believe that overall, global central banks can maintain their independence today.
Why was central bank independence introduced? Macroeconomic stability is beneficial to society at large. In most cases, there is an understanding that it is very important for the central bank to be independent in terms of how it implements monetary policy.
What kind of independence is that? In the case of the Bank of Russia, its monetary policy is conducted independently of any other agencies, the Government or federal executive authorities. Our policy is fully transparent at that, and the Bank of Russia is accountable to the State Duma.
Essentially, central bank independence is an indicator of the maturity of economic policy. Why did so many countries take this path? The idea was to avoid the temptation of solving various important problems by accelerating inflation, by sacrificing social wealth for the sake of immediate problems.
Let me remind you that high inflation primarily affects low-income households. In practice, a shift away from central bank independence, as we have seen in some countries, undermines the credibility of national currency. This may create financial stability risks and lead to inflation. The recent experience and several recent clear cases show that it takes a very long time to rectify the consequences: confidence is easy to lose and difficult to reinstate.
QUESTION from Elakhovsky YouTube channel:
The Monetary Policy Guidelines, your annual policy paper, describe a global crisis scenario among others. According to some analysts, we are on course to take this path. The evidence of this trend is low oil prices, a rise in deglobalisation, mounting risks of recession in major economies and lower prices for financial assets. However, other analysts think that your risk scenario is different, except only for oil prices. Which side are you on? How probable is it, in your recent assessments, that the risk scenario of the Monetary Policy Guidelines becomes the baseline scenario in 2025? If that happened, what would be the value of the key rate by the end of the year?
Elvira NABIULLINA:
Indeed, a deterioration in US-China trade relations was included in our risk scenario. However, we still believe that the current situation is far from the possible risk scenario described among others in the Monetary Policy Guidelines.
That risk scenario assumes a significantly stronger change in global growth, that is much lower growth rates of the global economy, oil prices, and therefore a more pessimistic forecast for Russia’s and inflation.
Compared to the February forecast, our updated baseline forecast really assumes a slight worsening in external conditions, as I have said; but our outlook for domestic development has been little changed.
We will closely monitor external conditions, and we consider their deterioration to be a key inflation risk.
QUESTION from Economikal Telegram channel:
I would like to ask you about the potential outcome. The US states that the potential outcome of all the trade wars can be a weakening of the dollar against key global currencies. Does the Bank of Russia currently assume the risk of a weaker dollar? On the one hand, this may have a positive effect given that the ruble may strengthen then, producing a disinflationary effect. On the other hand, households keep vast US dollar savings, and the Central Bank’s foreign currency reserves are also in US dollars. That is, we would have to reconsider our concept of the dollar as a global reserve currency.
Elvira NABIULLINA:
As for the forecasts, it is difficult to make assumptions given the dynamism of current developments. However, a worsening in external conditions is possible. We indeed expect US tariffs to be higher than before these events, but slightly lower than is currently discussed, and that will have major implications for the global economy.
As regards the Russian economy, I would like to stress once again that the impact is very limited, in our opinion. The main channel of influence is slower global growth, a potential drop in demand for commodities including Russian exports, and the impact on the exchange rate. We expect that this can be an inflation driver.
As regards some other channels of influence that are important for other countries, we believe that we have fewer channels like this. Why is that? Most our exports are commodities, and commodity exports, apart from their dependence on global economic growth, are less elastic in relation to the exchange rate (to answer your question about the impact of the exchange rate). While our non-commodity exports are on the rise, they have yet to become large enough.
As regards the impact of the exchange rate on the domestic market, most of corporate and household savings are still in rubles. We have seen a significant dedollarisation, so a decline in the exchange rate does not involve any material risks.
Foreign currency positions of banks are balanced, thanks to the regulation we have introduced.
QUESTION from Izvestia:
As you have said today, trade wars are an inflation risk for Russia. How many percentage points do you think may the trade wars and the drop in oil prices add to the inflation rate? Will that be a lasting effect?
Elvira NABIULLINA:
We do not single out the effect of individual factors, so I am unable to quantify a specific effect in percentage points of inflation. However, I will repeat once again, protectionism is overall dragging down global economic growth. It holds back consumption and may disrupt investment and supply chains, hamper technological processes and labour productivity.
The scale of the effects depends not only on how much protectionism is growing (and it is growing), but also on what form it assumes, the retaliatory actions, and the affected sectors in a country.
Our GDP and inflation forecasts for Russia remain unchanged, although we have downgraded our global economic estimates, i.e. global GDP growth and oil prices. However, uncertainty is indeed high, and the inflation effects may be more significant on the back of a more fragmented global economy and a more abrupt slowdown in global growth. The inflation effects will be influenced by our monetary policy.
QUESTION from Market Power project:
The 4% inflation target was set when the economic structure was different. However, by now, both the domestic and global economies have changed drastically. My question is, under what conditions can the target for inflation be changed?
Elvira NABIULLINA:
We are convinced that low inflation is essential for sustainable development and important for consumers and businesses regardless of the economic structure.
It is hard to imagine people happily living with persistently high inflation in certain conditions or with structural changes.
I will say that our 4% target, when compared with other countries, is the upper bound of what is understood as price stability. It is true that the target value may change in the future, but we believe it can only change in one direction.
As a reminder, most of the countries having the same monetary policy regime – those generating most of global GDP – have much lower inflation targets than ours, namely
Indeed, at a time of intense structural changes as was the year 2022, a certain period of above-target inflation may be tolerated to enable businesses to adjust. However, this does not mean that we are abandoning our inflation target.
Furthermore, we have seen a changing nature of inflation since 2023 H2. It is caused by overheating demand, rather than the intensity of structural changes. This is why there is no reason to tolerate high inflation.
Also, we have always pointed out that an inflation rate significantly above that in foreign economies will always send the ruble down. Higher inflation implies higher interest rates in the economy. If we raise the inflation target, we will never have low rates.
No matter the structure, let me stress this once again, high inflation does damage to both households and businesses.
QUESTION from Pravda Severa, Arkhangelsk):
Last week, a number of large banks cancelled fees they had on Family Mortgage loans. But the move, they warned, would lead to a drop in the volume of mortgages. Does the Bank of Russia monitor the issuance of preferential mortgage loans under the Family, Arctic and Far Eastern programmes? Does the Bank of Russia share the concern that the cancellation will entail a reduction in mortgage lending?
Elvira NABIULLINA:
Certainly, we monitor the disbursement of various types of both preferential and commercial mortgages, and we do insist on banks cancelling the fees. Why do we? The matter is that these fees ultimately drive up housing prices, which runs counter to the logic of subsidised programmes – for such programmes are about increasing housing affordability. In our opinion, the fees are just against the objective of subsidised loan programmes.
As regards the banks’ concern that the cancellation of the fees will entail a decline in mortgage loans and mortgage loans would be unprofitable for them, we believe that any drop [in the issuance of loans] – if at all – will be very short-lived. Why is that?
First, A wide range of banks are participants in the preferential programmes, but not all of them introduced fees. By the way, those working without the fees argue that subsidised mortgages are still lucrative.
More so, the Ministry of Finance has increased the compensation for banks to 24 or 24.5%, depending on housing category, from 23%.
Also, with the deposit rates having also decreased to 20%, by some
What will happen? Competition will help decrease the share of banks limiting the disbursements and rise the proportion of those already working without fees, and they will increase the disbursements.
Another reason for the banks’ interest in mortgage loans is that this ultimately affects the repayment of loans to developers. Otherwise they would have to create loss provisions for such loans.
Therefore, we retain our forecast for annual growth in the mortgage portfolio at
QUESTION from PRO.FINANSY project:
In March, corporate lending accelerated to 0.9% from the more moderate 0.1% (i.e. close to zero) reported in February. Did these data influence today’s decision? Can we state that this is the reversal of the downward trend in corporate lending the Central Bank has observed over the past months?
Elvira NABIULLINA:
No, we cannot. A slight acceleration, I would like to emphasise, is far from the average monthly rate we saw last year, for example. The acceleration in corporate lending last March was expected.
The growth of loans between January and February was underestimated due to the impact of fiscal flows, and we made it clear. At the time, companies received advances from the budgets and were intensely repaying their debt.
But it is not only corporate lending that is important here or even lending, but the pattern of overall demand. The current rates of money supply growth are very telling: they have slowed down. These rates are in line with the inflation decline to target in 2026.
Annual lending is still decelerating, which is also consistent with our forecast. You may have seen this: we have left this forecast unchanged.
QUESTION from Domclick:
Can a key rate reduction be expected this year? What are the chances?
Elvira NABIULLINA:
Looking at our forecast of the key rate for this year, one can see that both a reduction and increase are possible. That said, we believe that the probability of an increase is down compared to the previous Board meeting. We are saying at that tight monetary conditions will have to be maintained for a long time.
If inflation expectations decline, we will maintain the necessary tightness of monetary conditions even with a declining nominal key rate, since our priority is tight monetary conditions in real terms.
QUESTION from Expert:
There are increasingly more analysts saying that the current ruble appreciation is excessive in terms of risks of reduction in oil and gas revenues. Judging by the impact of the exchange rate on inflation, is there a strengthening limit that could accelerate inflation?
Elvira NABIULLINA:
A stronger ruble is a disinflationary factor and therefore does not trigger a rise in inflation. It is important for us to see how sustainable it is. A stronger ruble always brings disinflationary effects.
As you know, we never present forecasts or other quantitative benchmarks for the exchange rate. We have a floating exchange rate, and it is imperative that we lower inflation regardless of external and internal circumstances.
I will repeat my answer to the previous questions. The strengthening of the ruble is attributable to both sustainable and temporary factors. It is still difficult, probably impossible, to quantify the sustainable portion. However, compared to the previous meeting, we are more confident that the ruble appreciation was brought about by a meaningful role of the sustainable factors.
Your likely concern is about a potential weakening of the ruble. Yes, any drastic negative changes in the external environment, should they emerge, would weaken the ruble. We treat this as an inflation risk. In this case, we will adjust our monetary policy, which will become tighter, all else being equal.
I would like to say this yet again: current monetary policy, which is tight enough, has been a key and steady driver of a strengthening in the ruble over the past
Alexey ZABOTKIN:
Where the ruble is strengthening steadily, this strengthening is aligned with a revision of inflation expectations and the inflation forecast.
A really considerable steady appreciation of the ruble will certainly be taken into account when making monetary policy decisions to the extent that it adds optimism to future inflation estimates.
QUESTION from Anna_finance blog:
In 2024, the number of microfinance borrowers was up 24%, with one online marketplace accounting for a quarter of this growth. Buyers visiting online marketplaces tend to misunderstand the word instalment – which is in fact a loan. Also, marketplace subscribers remember past instalment deals, instalment deals from the brands that left, and they see this is not how it used to be. Moreover, marketplaces are even rising loan rates for such purchases. In this regard, how does the Bank of Russia monitor and regulate this? Perhaps, to protect borrowers from impulsive purchases, some limits need to be introduced to prevent, for example, instalment buying or loans to buy products priced below a certain range?
Elvira NABIULLINA:
We do not believe we should ban such loans or instalment buying. This would make financial products less accessible to people. But we fully agree that there are big problems here, and we need to protect people against coercive tied selling, hard selling and other unfair sales practices, no matter where they occur, in online marketplaces or elsewhere.
You are totally right in saying that an instalment deal is essentially a loan, that is debt. It is therefore crucial to have an instalment buying law as soon as possible, which is currently before the Duma. The law will add transparency to this market and define rules to protect those buying on such instalment plans. In the banking sector, most of these issues are covered by regulation, and it is time we introduced appropriate regulation for marketplaces.
Incidentally, we have proposed that the Government should include some provisions in the platform economy bill they are currently working on. Those provisions protect consumers against poor information, non-transparency and the imposition of unnecessary loans and other financial services in marketplaces.
Your example is about how microfinance loans are taken in marketplaces. That is why, regardless of where financial services are received, consumer rights must be protected.
It seems to me that the Government, lawmakers and the Bank of Russia all share the position that consumer rights should be secured regardless of where (marketplace, bank, organisation) they receive certain services.
QUESTION from Bankovskoe Obozrenie (Banking Review):
Does the Bank of Russia intend to take any specific measures regarding the strengthening of the ruble? What are these measures, if you can disclose that?
Elvira NABIULLINA:
Our policy is not about targeting the exchange rate, but inflation. This is why we are not taking any measures to steer a level of the exchange rate. The exchange rate is defined by export revenues, import demand and interest rates.
The exchange rate is also influenced by a high key rate and monetary policy, so we have an impact from this standpoint. The recent strengthening of the ruble is largely the result of the tight monetary policy.
The current strengthening of the ruble, if sustainable, is consistent with our goal of returning inflation to 4%. Indeed, if the strengthening of the ruble proves sustainable, this will create room for a sooner decrease in the key rate.
Thank you.