The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
The Ministry of Finance (MOF) is still refining the mechanism for the targeted RON95 fuel subsidy, which is expected to be implemented by mid-2025. According to Muhammad Kamil Abd Munim, the Political Secretary to the Finance Minister, the MOF is actively engaging with stakeholders to ensure that the subsidy program is implemented smoothly without causing confusion or anxiety among the public.
During an appearance on Bernama TV’s Ruang Bicara program, Muhammad Kamil emphasized the importance of carefully examining the details of the subsidy to protect the welfare of deserving groups, ensuring they continue to receive the financial support they need.
The proposed targeted subsidy was announced by Prime Minister Datuk Seri Anwar Ibrahim in the 2025 Budget, with the aim of saving up to RM8 billion, as 40% of the RON95 subsidy currently benefits foreigners and wealthy individuals. The government remains committed to maintaining subsidies for the majority of Malaysians, similar to the approach taken with the targeted electricity subsidy.
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