By Keeping the Policy Rate Unchanged, the kremlin Is Increasingly “Tightening Belts” of the People

In an attempt to “calm down” the moods inside the country, “rosstat” officially reports annual inflation at 10.3 %. At the same time, the real “inflation for the poor” (the consumer price index for essential goods) is already at 17 %. This is 1.7 times higher than the official figures and casts doubt on the reliability of official statistics in assessing russia’s socioeconomic situation.

On April 25, the central bank of russia decided to keep the policy rate at 21 %, which shows a continuation of the course of tough monetary policy. In turn, this reduces investment activity in russia, slows down GDP growth and increases the financial burden on businesses.

Due to the high overall price level (despite the so-called “reduction of inflationary pressure”), the regulator is forced to continue to maintain tough monetary conditions in order to bring inflation back to the target level of 4 % by 2026. The central bank forecasts the average policy rate in 2025 to be 19.5 %–21.5%.

Further strengthening of the ruble is highly unlikely due to the unstable nature of the foreign economic balance and geopolitical uncertainty. The Foreign Intelligence Service of Ukraine forecasts that in the context of high inflation, the continuation of the kremlin’s current policy will lead to a further decline in real incomes and increased social tensions in the country.