Russian President Vladimir Putin has urged the central bank to make a “balanced” decision on its key interest rate when it meets on Friday, amid concerns over an overheating economy and high inflation. The regulator is expected to hike its key interest rate by 200 basis points to 23%, the highest level in over 20 years.
Putin said that while he generally backs the central bank’s tight monetary policy, it could have acted more quickly to address the issue of overheating and rising inflation. He cited Russia’s economic growth rates, which are expected to slow from this year’s 4% to around 2-2.5% in 2025.
The president also pointed to external factors such as Western sanctions and extreme weather conditions that have contributed to high prices and inflation. Inflation is projected to reach 9.2%-9.3% in 2024, according to central bank governor Elvira Nabiullina’s warning to Putin.
Putin acknowledged that the current economic measures are having an impact on households, with some people struggling to afford basic goods due to rising prices. He expressed hope that the central bank’s decision will be “balanced” and meet the needs of today, while maintaining macroeconomic indicators.
The central bank’s rate hike is expected to have strong criticism from businesses, which have already seen significant increases in costs as a result of the regulator’s successive rate rises.
Source: https://www.reuters.com/world/europe/putin-says-russias-economy-is-overheating-inflation-is-worrying-2024-12-19