UK’s Ministry of Defense has revealed that according to British intelligence reports, Russian businesses are increasingly critical of high interest rates, while inflationary pressures are likely growing due to the recent depreciation of the ruble.
In November 2024, the ruble fell to its lowest value against the US dollar since Russia invaded Ukraine in 2022, reaching 114 rubles per dollar.
The ruble’s decline has been linked to sanctions imposed on Gazprombank and economic data indicating continued overheating of the Russian economy. In response, the Russian Central Bank (CBR) announced it would halt foreign currency purchases until 2025.
Despite this, the ruble stabilized around 100 rubles per dollar by 20 December 2024, fueling market expectations of another key interest rate hike.
At its 20 December meeting, the CBR held the key rate steady at 21%, following an October increase from 19% to 21%—the highest rate since Russia’s full-scale invasion of Ukraine.
“The CBR’s decision to hold interest rates at their current level will likely add to the imbalances in the economy due to inflationary effects of the depreciation, labor shortages, and high government spending,” the intelligence assessment noted.
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