UK intelligence predicts rising inflationary pressure on Russia's economy in 2025

The UK Defense Ministry reported the information.

On October 25, the Central Bank of Russia raised its base interest rate to 21%. This is the highest level since the beginning of the full-scale invasion of Ukraine and reflects the Central Bank's concern about the growing inflationary pressure on the Russian economy.

The head of the Central Bank of Russia, Elvira Nabiullina, stated that "more drastic changes" to monetary policy might be required to get inflation under control. However, there is growing criticism of the CBR’s decision to keep interest rates high from key business executives across multiple Russian industries.

"High interest rates in the Russian economy are highly likely to restrict business investment and growth. Inflationary pressures will highly likely continue to intensify in 2025 as government spending is forecast to increase, and labor shortages and pressure from sanctions persist. This will lead to increasing trade-offs between efforts to control inflation and supporting growth of the Russian economy," the statement says.

• In 2025, Russia plans to increase defense spending to a "historic maximum" and allocate a record 13.2 trillion rubles ($142 billion), which amounts to 6.2% of its GDP.