Central bank expects to return to neutral 5–6% key rate in 2025

MOSCOW, Nov 8 (PRIME) -- The central bank expects to return to a neutral key rate, which the regulator still sees at 5–6% in 2025, Chairwoman Elvira Nabiullina said on Tuesday.

“The key rate will be at a level that will gradually reduce inflation, this means it will be a little higher than the neutral range for some time,” Nabiullina told at a meeting of the State Duma lower house committees that considered the main directions of a unified state monetary policy for 2023 and 2024–2025.

“We expect to return to a neutral rate in 2025,” she added.

The chairwoman said that the Russian banking system has withstood shocks of this year well and retains the potential for lending and a margin of safety.

According to Nabiullina, lending is now growing at a good pace, especially corporate lending demonstrating that structural transformation of the economy is going on, enterprises use credit to adapt to new conditions, to replace external debt.

She also said that the central bank plans to use regulatory incentives to allow banks to meet the increased credit needs of business.

Russia's corporate loan portfolio, according to preliminary estimates, grew by 9.9% in January–October, which is slightly more than last year, when the figure was at 9.7%, she said.

The flow of funds from Russians’ accounts of Russians into cash in recent weeks is already close to the seasonal norm, Nabiullina said.

The central bank sees no further prerequisites for liberalization of capital controls, the official said.

Nabiullina said that the sanctions pressure is intensifying, affecting partners in other countries as well, she added.

“The sanctions are very powerful. We should not downplay their impact both on the Russian and international economy. We cannot get isolated from their impact,” she said.

She also said that the situation and the balance of risks in the world economy have shifted to a more severe scenario in recent months, if not to a global crisis.

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