On March 21, 2025, the Central Bank of russia (CBR) decided to hold the key interest rate at 21 per cent. Interest rates are at their highest level in over 20 years, compared to a pre-war interest rate of 8.5 per cent in January 2022. While interest rates remain high, the number of corporate bankruptcies will highly likely increase in russia, the UK Defense Intelligence reports.
In November 2024, the ruble depreciated to its lowest rate since the beginning of russia’s invasion of Ukraine in 2022 (114 per US dollar). The ruble has since appreciated to a high of 81 per US dollar in March 2025. The appreciation of the ruble will highly likely reduce federal revenues from oil and gas, in ruble terms, increasing pressures on the federal deficit.
Read more: The UK Defense Intelligence: russia’s Advance in Ukraine Drops Sharply, Seeing Limited Gains in March
Despite the ruble’s appreciation, inflation has continued to rise. In February 2025, inflation rose to 10.1 per cent from 8.5 per cent in October 2024, when the interest rate of 21 per cent was introduced. Labour shortages, alongside high levels of government spending, almost certainly mean inflation will remain above the CBR’s target of 4 per cent through 2025. Long term inflationary pressure will highly likely exacerbate pressures on russia’s ability to sustain high defense spending.
Read more: The UK Defense Intelligence: russia Expands Conscription as War Casualties Near One Million
