- On 20 December 2024, the Russian Central Bank (CBR) decided to hold interest rates at 21 per cent, marking a shift from its recent approach to tackling inflation. At its last meeting in October 2024, the CBR hiked interest rates from 19 per cent to 21 per cent, the highest rate since the beginning of the war in 2022. Criticism of high interest rates is growing amongst Russian businesses; however inflationary pressures are also likely intensifying, in part due to the recent depreciation of the ruble.
- In November 2024, the ruble depreciated to its lowest rate against the US dollar since the invasion of Ukraine in 2022 (114 per US dollar). The drop in the ruble’s value was almost certainly driven by the announcement of sanctions on Gazprombank, followed by the publication of economic statistics indicating continued overheating of the Russian economy. In response, the CB announced it would cease the purchase of foreign currencies until 2025.
- However, the ruble remained above 100 to the US dollar until 20December 2024, leading to wide market expectations of another interest rate hike. The CBR’s decision to hold interest rates at the current level will likely add to the imbalances in the economy due to the inflationary effects of the depreciation, labour shortages and high government spending.
Latest Defence Intelligence update on the situation in Ukraine - 03 January 2025.
— Ministry of Defence 🇬🇧 (@DefenceHQ) January 3, 2025
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