Russia’s Central Bank was forced to hold its key interest rate at 21% in a major blow for the economy. The decision comes as inflation continues to hover at around 10.3%, latest financial data for April shows.<\/p>\n
Elvira Nabiullina, the bank’s governor, said there was broad consensus among officials to keep the rate on hold. She added: “What we are saying is that it will be necessary to maintain tight monetary conditions for an extended period of time.”<\/p>\n
Nabiullina has been coming under increasing pressure from the Kremlin and business leaders to reduce the rate.<\/p>\n
The current rate is at its highest level in 20 years and is imposing immense financial strains on companies across the country.<\/p>\n
Vladimir Putin<\/a> had previously warned the governor not to \u201ccryogenically freeze\u201d the economy.<\/p>\n Sergey Chemezov, the head of Russia<\/a>‘s defence conglomerate Rostec and a former KGB colleague of Putin, also cautioned that many companies could go bust.<\/p>\n “And at such an interest rate<\/a>, all the profit that we provide is all eaten up by the interest that we are forced to pay to the bank,” he told the RBK publication.<\/p>\n “If we continue to work like this, then most of our enterprises will go bankrupt.”<\/p>\n Bankruptcies are reported to be 20% higher in 2024 than they were in 2023, with many more closures expected to come in the near future.<\/p>\n