For several months, prices have been increasing rapidly throughout the Russian economy, driven up by substantial governmental expenditures related to the Ukraine conflict along with severe labor shortages.
Monthly inflation surged past 10 percent last month for the first time in two years, with predictions indicating that price hikes will likely average between seven to eight percent for this year.
"The current inflationary pressures have subsided but continue to be elevated," the central bank stated in their announcement regarding the choice to keep interest rates steady.
The statement also indicated that reaching their 4% inflation objective would necessitate "keeping stringent monetary policies in place for an extended duration."
In October, policymakers increased the main interest rate to 21 percent, even though both businesses and banks voiced concerns that elevated lending rates were impeding economic expansion.
In January, the CMASF, an economic research organization based in Moscow, cautioned that Russia was likely to experience a significant increase in corporate bankruptcies due to elevated interest rates.
According to Russian President Vladimir Putin, Russia is allocating nearly nine percent of its GDP for defense and security purposes. Military expenditures are projected to increase by approximately 30 percent once more in 2025.
That expenditure has inflated the Russian economy, somewhat counteracting the effects of Western sanctions.
However, because a significant portion of spending is controlled by the government, which is less sensitive to increased borrowing expenses, experts argue that raising interest rates might not effectively curb inflation.
bur/bc
© Agence France-Presse
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