Comparing a high key rate period to the constant use of antibiotics
High-interest rates might be likened to experimental antibiotics in medicine, uncharted territory with potential risks. Just like stopping a course prematurely can lead to a relapse, a premature lowering of rates could bring back economic symptoms. And the catch? Resistance to these rates. We might have to switch to a more potent, untested solution, warning Dmitry Pyanov said during a conference call (TASS quote).
Stressing that the world economy hasn't faced such a crisis since 2022, Pyanov asserted the Central Bank will chill until they've ensured ALL issues have been addressed. It's way too soon to press that lower button, he warned.
Ever since October 2024, the key rate has remained at an all-time high of 21%. Next up, the Board of Directors' meeting is scheduled for April 25. Analysts predict the Central Bank will keep their poker faces on – no key rate change, according to a unanimous poll by "Expert". They foresee the rate to begin its descent as early as June, hitting the 13-16% range by year-end. Per VTB CEO Andrei Kostin, the Central Bank could still be holding onto a 19% key rate by the end of 2025.
Stay tuned for more economic updates in our Telegram channel, @expert_mag
Enrichment Data:The Bank of Russia's latest announcments show that the key rate has been maintained at 21% per annum and forecasts the average key rate for the remainder of 2025 to be within the range of 18.8-21.8%. For 2026, the forecast is 13-14%, to return inflation to around 4%. By 2027, the forecast points to an average key rate of 7.5-8.5%. For more insights from financial analysts or VTB CEO Andrei Kostin, additional sources would be required.
- Dmitry Pyanov, during a conference call, warned that resistance to high-interest rates might require switching to a more potent, untested solution.
- The key rate, currently at an all-time high of 21%, remains unchanged according to analysts, with no change expected at the April 25 Board of Directors' meeting.
- The Bank of Russia forecasts the average key rate for the rest of 2025 to be within the range of 18.8-21.8%, with a gradual decrease expected by June, reaching 13-16% by year-end.
- Per VTB CEO Andrei Kostin, the Central Bank could still be holding onto a 19% key rate by the end of 2025, as predicted by some financial analysts. Keep updated on these developments by following @expert_mag on Telegram.
