Rapid growth in money supply keeps maintaining high inflation

At its first meeting in 2025, the Bank of Russia kept the key rate at 21% per annum. In January, inflation accelerated to 9.9%. The reason for the increased inflationary pressure remains a significant expansion of aggregate demand, outstripping the possibility of increasing the supply of goods and services and supported by stimulative fiscal policy. However, tight monetary policy in combination with normalization of the situation on the labor market and stable ruble exchange rate will gradually ensure cooling of lending, stabilization of demand growth rates and slowdown of inflation with moderate GDP growth rates of 1.0–2.0%.