Russia's Central Bank/Nabiullina: No Signs of Stagflation, Interest Rates May Be Cut Next Year

Forex - The Governor of the Central Bank of Russia, Elvira Nabiullina, stated that she does not see a risk of stagflation, which is a phenomenon characterized by high inflation coupled with low economic growth or recession. Nabiullina also mentioned that, barring a new shock to the economy, they could start to reduce the current benchmark interest rate of 21% next year. She noted that raising the benchmark interest rate to levels not seen in over 20 years in Russia has proven effective in combating inflation, which currently stands at 8.5%, and that it is expected to be lowered to 4-4.5% next year. “As inflation slows down, and provided there are no additional external shocks, we will consider a gradual reduction of the key interest rate. The cut will begin next year,” she said. The Central Bank of Russia projects an average interest rate of 17-20% by 2025.