Central Bank head Nabiullina says the economy has reached a tipping point and inflation is slowing down

The Central Bank (CBR) plans to reduce inflation in 2025 if no new external shocks occur. This was announced by the head of the regulator Elvira Nabiullina at the plenary session of the State Duma on Tuesday, November 19.

"We are now at a turning point. According to the assessment of banks and enterprises, already in the coming months we can expect a general slowdown in the growth of the corporate credit portfolio, a decrease in its contribution to the growth of aggregate demand with some lags, and here are very important lags," Nabiullina said.

She noted that this will lead to a decline in inflation with some lag. The fall in annual inflation will be a confirmation of the effectiveness of monetary policy aimed at moderating price growth.

Nabiullina believes it is possible to bring inflation down to 4.5-5% next year and then stabilize it around 4%. As inflation slows down, a gradual reduction of the key rate will be considered, if there are no additional external shocks.

The head of the Central Bank reported a slowdown in mortgage lending growth. She emphasized that this is a natural process after a period of very rapid growth and is not a critical decline, but rather a return to the indicators of the beginning of the year.

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Earlier, on November 12, representatives of the Bank of Russia denied the statement of State Duma deputy Maria Prusakova about the alleged plans of the Central Bank to start reducing the key rate in the spring of 2025. Prusakova noted that Nabiullina at a meeting with the CPRF faction had allegedly promised that the key rate would decrease from March and gradually reach the level of 2023. However, the Central Bank of the Russian Federation said that the words of the deputy do not correspond to reality.

Before that, on November 11, financial expert Alexei Krichevsky told Izvestia that the Central Bank's Board of Directors may raise the key rate again in December. In turn, Elman Mehtiyev, founder of the Kredchek service, noting the Central Bank's influence on inflationary processes, specified that there is a decrease in the rate of retail lending and its role in the acceleration of inflation. However, there is also the effect of previously postponed decisions, including the indexation of the cost of housing and utilities services, he added.

The Central Bank of Russia's Board of Directors raised the key rate to 21% on October 25. The head of the regulator Elvira Nabiullina said that during the meeting three options were considered: to raise the rate to 20%, to 21% and higher. She specified that the option of maintaining the rate level was not considered.