The head of the Russian Central Bank, Elvira Nabiullina, looks set to compound Moscow’s economic misery further as she warns that inflation is continuing to rise.
She warned on Wednesday that interest rates may have to be hiked further but added that the decision is “not predetermined.”
Ms Nabiullina said: “We have indicated that the Central Bank is open to the possibility of raising the rate, but I want to emphasise that this is not predetermined.
“Yes, there is a new pro-inflationary factor, the exchange rate, and price growth remains high, but we are already observing, according to the latest data, a credit slowdown, including corporate loans.
The Russian Central Bank last raised interest rates in October to a record 21 percent to “prevent [Russia] from entering an inflationary spiral.”
But Ms Nabiullina says this has not done enough to quell the inflationary pressure.
She continued: “Unfortunately, inflation this year will be higher than next year. But the path to our target will take all of next year and may extend into 2026.”
Russian President Vladimir Putin is grappling with inflation that has seen the price of various food products increase rapidly, even by tens of percent in some instances.
According to reports, butter theft has spiked sharply as more and more Russians are unable to afford basic goods.
This has not been helped by the recent collapse of the rouble, which was trading at 114 against the US Dollar last week.
A top EU diplomat has said that the Russian economy is in a “very dire state.”
Kaja Kallas said: “First, in March, the criminalization of circumvention of sanctions will enter into force.
“I think this is a good thing. And a signal to everybody not to circumvent sanctions. But there is so much more we have to do to make sure that the sanctions are really followed.
“What I want to stress is that we also see the sanctions working, but if we concentrate all our efforts on implementing the sanctions properly, we could achieve more results, which is weakening Russia.
“We see their economy in a very dire state.”
