Published by Global Banking & Finance Review®
Posted on January 20, 2026
2 min readLast updated: January 20, 2026
Add as preferred source on GoogleRussia's central bank manages inflation amid VAT hikes, with the government closely monitoring economic stability and interest rates remaining high.
MOSCOW, Jan 20 (Reuters) - Russia's central bank is monitoring the situation with rising prices in the country and taking measures to maintain stability, the Kremlin said on Tuesday when asked about the inflationary impact of a rise in valued-added tax.
VAT rose by 2 percentage points at the start of the year, to 22%, in a move designed to boost the state budget and compensate for increased military spending and falling oil and gas revenues.
Asked if the Kremlin was worried that inflation might exceed the central bank's forecast range of 4-5%, spokesman Dmitry Peskov told reporters there were no such concerns at this point.
"In fact, the central bank is monitoring the situation and taking the measures it deems necessary to maintain macroeconomic stability. So far, this has been successful," he said.
He said the government was watching the situation closely and "discussions will take place as necessary".
The Russian central bank has maintained high interest rates for years, squeezing consumers and drawing complaints from businesses, in an effort to bring inflation back down to its target of 4%.
The key interest rate now stands at 16%. Consumer prices rose by 5.59% last year, compared to 9.52% in 2024, but household inflation expectations remain high.
Economists say the VAT rise sparked faster-than-expected price growth in the first half of this month, and some analysts predict the central bank may therefore refrain from cutting rates again when it next meets on February 13.
(Reporting by Anastasiya Lyrchikova; Writing by Mark TrevelyanEditing by Andrew Osborn)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
A central bank is a financial institution that manages a country's currency, money supply, and interest rates. It oversees the banking system and implements monetary policy.
Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production or distribution.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the principal amount. They are influenced by central bank policies.
Monetary policy refers to the actions taken by a central bank to control the money supply and achieve specific goals such as controlling inflation, consumption, growth, and liquidity.
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