Russia's second-largest lender VTB (VTBR.MM) sees 2025 GDP growth at 1.9%, above the International Monetary Fund's forecast of 1.3%, while inflation will slow to 6.4% from the current rate of 8.5%, VTB's CEO Andrei Kostin told Reuters in an interview.
"We believe that it will still be possible to reduce inflation to 6.4%. However, given the high military expenditures and the sanctions, the key interest rate may not be fully effective as a tool for managing inflation," Kostin said.
"The interest rate as a tool does not fully work due to many factors such as the volume of loans that are not sensitive to the rate and to inflation expectations," Kostin said.
He said the interest rate could go up to 23% this month.
"Our analysts believe that by the end of this year it could be 23%, but beyond that, it's hard to say."
Kostin said lending growth, one of the factors behind inflation, will slow to 10% next year from 20% in 2024, with companies still borrowing at high interest rates to complete their ongoing projects.
