Russian Inflation slowdown, prospects of key rate reduction: statements by Central Bank chief Elvira Nabiullina

by TASS [7-2-2025 published].

(As you can also see from the Related links at the end, Elvira Nabiullina is considered highly accomplished & very respected both within Russia & externally. She has been considered a 'genius' in helping Russia navigate excessive sanctions since early 2022. She also helped Russia prepare long before 2022. — RAD)

The Bank of Russia sees that inflation is slowing down faster than expected.

ST. PETERSBURG, July 2. /TASS/. Inflation slowdown below the target will provide room for the key rate reduction, Central Bank Governor Elvira Nabiullina said at the Financial Congress of the Bank of Russia. Structural changes in the Russian economy are faster than expected, she said. However, it is difficult to find a solution to ensure a decline in inflation and avoid overcooling of the economy. Turbulent times lie ahead, Nabiullina said, adding though that those are new opportunities for development.

TASS has collected the main statements by the Central Bank chief.

On inflation slowdown in Russia

The general task is "quite complicated" as it implies finding "a balanced solution in order, on the one hand, to steadily reduce inflation, and on the other hand, to move to balanced rates of economic growth without overcooling."

The Bank of Russia sees that inflation is slowing down faster than expected, "though it is still above the target in annual terms and in current rates" - above 4%.

Inflation slowdown to levels below the target will provide the Bank of Russia with room for a quicker decline in the key rate than it projected earlier: "In total, everything signals a slowdown in business activity growth though from very high rates of 2023-2024. And if those concerns, indicators signal a faster slowdown in the economy, naturally, inflation will decline below the target. And this will give us room for a faster reduction in the key rate than we, for example, predicted."

Easing of tension on the labor market is also an indicator of slowing inflation: "We see easing of tension on the labor market, this is also an indicator though deficit persists."

Economic slowdown is inevitable after rapid growth in previous years: "Economic slowdown is inevitable after the rapid growth of previous years. We faced such economic slowdown before as a result of external shocks. <…> It seems that this slowdown is the result of monetary policy."

It is necessary to secure balanced growth rates of the Russian economy with low inflation, the Central Bank can influence this: "This should be treated as an inevitable process, we should achieve balanced growth rates. But we have a real choice in whether this will happen with high inflation or with low inflation. We can influence this choice."

On shifts in the Russian economy

Structural shifts in the Russian economy are faster than expected: "In my opinion, structural shifts in our economy are obvious, and they are large-scale. They are happening faster than I, for example, expected."

The adjustment of the Russian economy to external restrictions is over, "but structural shifts of a completely new type, technological ones in the first place, are now coming to the agenda": "And they may be more large-scale in terms of their consequences than what we experienced over the past two years."

The Russian economy should rely on domestic sources of financing to replace the model that existed when Russian enterprises received cheap foreign financing. "And it’s worth noting that the financial system passed this test."

On the labor market

Changes on the labor market, rising labor costs - "this is not a temporary factor, this is a long-term reality for us."

On challenging times

Turbulent times lie ahead but those are new opportunities for development: "We expect very turbulent times ahead, but I am sure that those are also new opportunities for development, for growth of labor productivity amid expensive labor. We can rely on this."

Exporters have found themselves in "scissors" of high demand and low exchange rate: "Exporters have found themselves in scissors: high rates, low exchange rate coupled with falling prices.".

Related

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