Elvira Nabiullina’s speech at joint meeting of State Duma dedicated committees on Bank of Russia’s 2025 Annual Report

Good afternoon, Mr Aksakov. Good afternoon, dear colleagues.

First of all, I would like to thank the working group and the deputies of the dedicated committees for your extensive professional contribution to the review of the Bank of Russia Annual Report. I also appreciate the high quality of the questions that we received as feedback on the report. You raised many pertinent questions, expressing your positions and concerns that we share. In some of them, deputies proposed specific solutions, prompting broad deliberations at the Bank of Russia. We are now ready to continue this discussion with you. We have put a lot of effort into preparing substantive answers – to your written questions as well – and forwarded them to the parliamentary factions via Mr Aksakov’s committee at the end of last week.

Around a third of the questions that we received were about monetary policy and its influence on the economy and inflation. There were also many questions about topics of concern to Russians, such as credit affordability, antifraud measures, banks’ resilience and role in economic development, the capital market, and the digital ruble. I should say that these questions are in line with our priority objectives that we rigorously work to achieve and I will try to cover all these issues and, of course, answer your questions. This meeting is also attended by my deputies, heads of key work streams, who participated in the preparation of the report from the very beginning. They will elaborate on the relevant topics, if necessary.

Let me begin with inflation. It is still a major concern to Russians because its rate was high for a very long time. Last year began with double-digit price growth of 15% in annualised terms (speaking of current inflation). Before that, inflation had been accelerating fast as well. In response, we were raising the key rate, which reached 21% in December 2024. We were largely criticised at the time, with many doubting that the key rate could be an efficient tool in reducing inflation and balancing the economy in the current environment.

Nevertheless, the key rate did work, primarily by creating incentives for households to accumulate savings (including ruble savings) and by moderating lending growth. It is tight monetary policy that helped reverse the inflation trend downwards despite new sanctions, additional budget expenditures, and other factors that could not be foreseen in early 2025, such as a spike in petrol prices and higher indexations of housing and utility tariffs.

As of the end of 2025, annual inflation dropped to 5.6%, which was the lowest inflation rate at year end over the past five years. This result was a considerable contribution of monetary policy to the growth of households’ real incomes and the protection of their savings.

Most importantly, our policy created conditions for underlying inflation to decelerate significantly. This is the type of inflation that is determined by the ratio between demand and supply.

Everyone was concerned about the impact of the VAT rise and the whole package of tax changes on price growth – whether they would lead to another wave of inflation. We were also thoroughly analysing prices in December, January, and February, and I can say that the effects were limited. The tax changes did make their contribution to inflation, but it was just above 1 percentage point. I assure you that with accommodative monetary policy, consequences would have been more tangible, and increased taxes would have been passed through to prices in totality. Nevertheless, this did not happen.

Thus, we were able to continue cutting the key rate while forecasting further disinflation. The Bank of Russia forecasts inflation to equal up to 4.5–5.5% at the end of 2026 and remain close to 4% from 2027 onwards. If the situation develops in line with our forecast, at the end of 2026, we will be able to say that the period of high inflation extending for five years is finally over. That is when it will be possible to expect moderate market-based interest rates and better plan business development for years to come.

Going back to last year, our main objective was not to decelerate inflation at all costs, but rather to design our policy so as to bring demand back to a balanced growth path smoothly and in a controllable manner, without shocks and excessive downward shifts. We were seeking to avoid both a premature easing of monetary policy that could trigger another round of accelerating inflation and overtightness of monetary conditions that could result in a recession and a surge in unemployment. Balanced and sustainable growth requires balanced monetary policy. There is no other way to achieve it.

Please note that, although our monetary policy was indeed tight and resulted in significant disinflation, banks provided additional ₽11 trillion to finance domestic enterprises, in the form of both loans and corporate bonds they purchased (by the way, bond offerings have recently been outpacing lending). I think we can agree that ₽11 trillion is a considerable contribution to the financing of businesses and the development of a supply-side economy.

Certainly, the question of whether the key rate should be lowered faster is still being discussed. When we held a meeting last autumn to discuss the Monetary Policy Guidelines, Alexander Zhukov suggested not just rejecting this option, but showing its consequences in figures. We have made these calculations and released them along with the model. There are three scenarios in total, two of which assume consistently accommodative monetary policy. The first one assumes a reduction in the key rate to 3% at some point. This low level is often suggested as a certain international benchmark. Indeed, you can see such policy rates in many countries where inflation is 2% or lower. The second scenario explores decreasing the key rate to 6%, which is around the current inflation rate, and we receive such suggestions as well. So, what have the calculations shown?

Setting aside the technical details, which are also available, we will see textbook hyperinflation in the first scenario, or double-digit price growth, which is hardly a desirable outcome. Indeed, economic growth would briefly gain momentum, but this momentum would soon falter, stifled by rising prices. Over a prolonged period, this experiment (I can call it nothing else) would cause losses to the economy. In the long term, GDP growth would be much weaker than in the case of low inflation. By the way, these scenarios (fortunately, purely hypothetical) give an exhaustive explanation why the current key rate is much higher than the inflation rate. I hope that our calculations will add substance to our monetary policy discussions.

What else is fuelling these discussions at the moment? There is a widespread opinion that although inflation is indeed declining, the economy has paid too high a price for this, now experiencing a sharp downturn in its growth. I believe this opinion is wrong. When almost all labour resources are utilised, economic growth cannot outpace labour productivity. That is, the economic slowdown was inevitable, and the only question was whether that would happen with or without high inflation. We believe that solutions to boost economic growth lie in incentives to increase labour productivity, rather than in accommodative monetary policy resulting in higher prices.

There is another question that always arises: where to get money to enhance productivity? Companies make investments primarily using their profits, with the latter totalling ₽27 trillion as of the end of 2025, which is a rather good result. Although this is 4% less than in 2024, we have to take into account that the bulk of last year’s drop in profits was associated with the situation in the oil production and refining sector where performance turned out to be weaker due to lower global oil prices and sanctions. Contrastingly, many industries focused on domestic demand saw their profits grow. This means that there is still potential for development.

In 2025, investment also remained high at ₽42.6 trillion. Adjusted for inflation, this is a little lower than in 2024, but about 25% more compared to 2021. The average growth rate of investment over the past three years is higher than economic growth, equalling 5.2% per year. Thus, estimated as a percentage of GDP, investment was up in 2025. I would like to emphasise that the achieved high level of investment is a solid foundation for sustainable enhancement of production capacities now and in the future.

You rightfully say that the economy needs more investments and they should be made now to ensure sufficient supply in the near future. All of this is true. However, we are aware that investments from borrowings alone cannot cover all needs, which became clear much earlier, and we spoke about this back in 2024. We need to develop the capital market. As I have said, bank loans to companies plus bonds totalled ₽11 trillion. By contrast, companies raised only ₽130 billion through initial public share offerings last year (this is several times less, although the potential is huge there) and the number of issuers is very small. Surely, we are very concerned about this disproportion. Companies, especially fast-growing ones, cannot and should not rely on credit alone. This is a global practice. Looking at tech leaders around the world, in different countries, we would see one thing they have in common – they have started out as public companies, relying on equity. This is exactly why the Russian President has set the objective to double the capitalisation of the stock market – to ensure that businesses shift towards the equity market. This, however, requires incentives for businesses, which we have been discussing with the Russian Government for a long time.

I should say there has already been some progress in this regard. We have designed a mechanism for partial redistribution of government support measures from lending to equity financing. The Government adopted a relevant directive back in December, but the mechanism will be launched only after the amendments are approved by the government agencies concerned, in particular by the Ministry of Agriculture and the Ministry of Industry and Trade that are in charge of the largest subsidised lending programmes in Russia. So far, this mechanism has actually started operating only in the sector of small and medium-sized enterprises, which is obviously not enough.

In addition, the Government has modified the framework for granting subsidies to businesses. Now, it stipulates that priority should be given to public companies, that is, those entering the capital market. This is a significant incentive, yet it will also take effect only after the Government revises all programmes to bring them in line with the new rules. We hope this will happen as equity finance should be developed further. In turn, companies should not be wary of going public. To this end, it is necessary to ensure the protection of property rights of all shareholders, both minority and majority ones. For public companies to be encouraged to enhance corporate governance, investors should have access to information. Surely, investor protection will make it possible for people to invest in businesses without fearing adverse consequences.

We are counting on your active support across all matters in this regard, especially considering that you participated directly in the development of instruments enabling households to invest in securities. I will now elaborate on these instruments and give some figures. In my opinion, this is a very important trend that has emerged owing to the laws adopted by the State Duma.

The Long-term Savings Programme (LSP), which we were extensively working on together with the Ministry of Finance, is gaining momentum. Over the past year, the amount of funds raised via the LSP doubled, compared to 2024 when it was launched. As of the end of 2025, households’ funds, including actual and forecast inflows, payouts, and the financial result, totalled ₽717 billion, with the number of participants currently exceeding 10 million. These are big numbers. We expect growth to remain active further on. Moreover, last year saw assets in individual investment accounts rise by nearly ₽300 billion as they also provide incentives to invest long term.

Another important channel that is sometimes overlooked is unit investment funds (UIFs). Over the year, individuals’ assets in UIFs increased by a third, or by ₽2.8 trillion.

Adding purchases of shares and bonds, the LSP, and other pension and insurance savings, households’ total investments in financial instruments reached ₽4.1 trillion. This is almost half of the growth in household deposits with banks over 2025. This means that investment in financial instruments was on the rise, showing people’s demand for them. Of course, it is important for companies to conduct public offerings and thus raise money they will invest in business development. We do everything on our part to facilitate this, working jointly with the Government to build confidence in the capital market and ensure robust investor protection.

In this context, there is one important question that we are often asked: what progress has been made towards unblocking the assets that were affected by sanctions in 2022? The measures that we implemented together with the Ministry of Finance made it possible to return these assets to investors in 2025 and ensure that the latter receive payments in the total amount of over ₽400 billion. Overall, since 2022, assets worth ₽5.3 trillion have been unblocked, while ₽6.7 trillion in assets and related payments have been shielded from sanctions risks and transferred to the Russian jurisdiction. These efforts are important as they restore justice, ensure that the funds do not sit idle, and promote confidence, which is critical to boost new investments in the Russian economy.

Deputies also raised questions about what else is done by the Bank of Russia to support economic growth, especially with regard to competition as these two concepts go hand in hand. One key task here is to make the economy more transparent, which is a process where the banking sector has played a prominent role recently. Ultimately, this is about ensuring fair competition. When the growing tax burden falls on bona fide companies, while the shadow sector receives increasingly more unfair advantages, it becomes difficult for those who operate transparently to develop.

The Government has prepared a comprehensive plan providing for additional measures to formalise the economy. The Bank of Russia participated extensively in designing this plan, having initiated a number of relevant measures. First of all, these include introducing the taxpayer identification number (TIN) as a single identifier for all bank customers who are individuals, limiting the amount of rubles that may be taken out of the country, integrating cashless payment systems with the retail receipt registration system, countering illegal creditors, etc.

What does this achieve? Specifically, using the TIN as a single identifier will enhance banks’ capacity to uncover chains of shadow settlements. Limiting the amount of cash rubles and gold that can be moved out of Russia will help combat grey imports. As regards cryptoasset regulation, we have aligned our positions with the Government and hope that the State Duma will shortly consider the relevant draft law. The bulk of settlements supporting the shadow economy are made in cryptocurrencies. Therefore, we should make this market transparent. Combined, these measures can produce a significant effect, according to our estimates. Let me stress that they will in no way affect individuals.

Now, I will speak of other work areas demonstrating certain progress where the State Duma has made an important contribution. Time is short, so I will make it brief. Here, we are surely talking about combating cyberfraud. Speaking before you a year ago, I said that our main objective was to implement the adopted legislative amendments that offered new instruments allowing people to feel positive changes. I believe we are making it happen. Let us not go too far ahead, but the measures we have implemented, e.g. the ones to counter credit fraud, have indeed proved effective. We see that, according to estimates, credit fraud has dropped by 40%. Indirect indicators, such as complaints from people and requests from the Ministry of Internal Affairs, point to an overall decline in the damage inflicted by fraudsters. The problem has not been fully solved yet, but we hope that these measures will work in synergy with the new ones.

By the way, the cooperation between the banking system and law enforcement agencies has enhanced immensely over recent years. In case of fraud, it is critical to promptly trace where the money has gone. To this end, we work jointly with the Ministry of Internal Affairs to further develop the online exchange of data, with its intensity and, all the more important, quality increasing notably.

Now, it is essential that we implement the President’s instruction regarding the interaction between banks and telecom operators. Specifically, this means integrating telecom operators into the information exchange process and obliging them to apply antifraud procedures, similarly to banks, because a phone call is the first channel that fraudsters use to contact people. We expect to see all of this to be elaborated in the Antifraud 2.0 package. This requires amendments to certain laws.

At the end of 2025, a very important law was adopted, stipulating a substantial increase in fines for violating consumer rights. It became clear that low penalties could stop no one. Now, we are putting together the necessary regulatory framework, exactly as we agreed when the law was adopted. In our view, the new fines will have a considerable deterrent effect, curtailing tied selling, misrepresentation, and misselling.

In this regard, I would like to mention current efforts, that is, the draft laws that are being considered by the State Duma, which are also very important.

First of all, this is a draft law on comprehensive debt settlement. The State Duma has adopted a law restricting debt relief companies’ ads, which is what the Bank of Russia and the Federal Antimonopoly Service are very appreciative of. Now, however, we should reduce people’s demand for debt relief services. This is where this law can be of help. How?

When people have several loans to repay, they simply do not know where to go and how to deal with different banks simultaneously, which is why they resort to debt relief companies. The draft law suggests that banks will take a proactive approach and offer comprehensive debt settlement services through interaction both with each other and with credit history bureaus. We believe this will help successfully solve the problems in a way that people would understand, thus protecting them from unscrupulous advisers.

Now, a few words about debt recovery. This matter also concerns households. When people take out loans, very few of them understand that they often agree to a simplified debt recovery procedure based on a notary’s executive inscription. We want people to be properly informed about this, so that they could withdraw their consent, having changed their mind, or apply to a court when they do not agree with the amount of interest accrued, and so on.

The third initiative, which we also believe to be a significant one for consumer protection, establishes requirements for the information about the terms of loans and payments in banks’ mobile apps, chats, and offices. This information does not fall under the definition of advertising, but clearly there is place for nudging. Therefore, these matters should also be regulated, in our opinion.

To conclude, a few words about compulsory motor third-party liability insurance (CMTPLI). Together with you, we have put a lot of effort into solving problems with CMTPLI affordability, and we can see that things are improving. The average CMTPLI price was declining for the second year in a row, despite the fact that prices for spare parts continued rising, pushing up average insurance payments. In our view, we could already start thinking about two crucial initiatives.

The first one is to raise the limit on personal injury compensation. This is about protecting the rights of road accident victims. The amount of ₽500,000 was enough when the CMTPLI system was launched, but times have changed. In many other types of insurance, e.g. carrier liability insurance, this limit is ₽2 million, which is four times higher. We could also discuss raising the limit in CMTPLI as it would be a considerable improvement for road accident victims.

The next thing is the availability of CMTPLI to taxi drivers. This topic has been discussed a lot. For standard CMTPLI contracts not to depend on an insurance company, we would like to introduce a mechanism that will guarantee their conclusion via the Public Services Portal. We can start with taxi drivers and motorcyclists as the latter have also experienced problems with insurance policies.

I would like to finish now. There are a lot more areas that we are actively working on, such as payment services, the digital ruble, and digital financial assets. Many of these topics were discussed yesterday, at the working group meeting. Me and my colleagues are ready to answer all your questions and comment on them. Thank you very much for your attention.