Elvira Nabiullina, Russia's top central banker, expressed that concern on Friday when she kept the key interest rate unchanged. Analysts polled by Reuters had expected her to hike rates to 23%.
"Our politics is aimed at prevention of extreme scenarios, which means that we cannot let the economy overheat further," Nabiullina said at a press conference following the rates decision, according to TASS state news agency.
"It is necessary to make sure that overheating subsides. That said, it is necessary to avoid excessive cooling, which is why we keep a close eye on this," she said.
Nabiullina said the central bank kept the interest rate steady as monetary conditions have "tightened even more than was implied by the key rate increase" in October, when the bank raised the rate from 19% to 21%. Russia started the year with its benchmark interest rate at 16%.
"Consequently, lending growth notably slowed down in November," she said. "We will need some time to assess how steady this deceleration in lending is and how the economy is adjusting to the new conditions."
Russian business leaders complain about high interest rates
Nabiullina's comments came as Russia's inflation hovered around 8% in the year to November, compared to the target rate of about 4%. Staples, like the price of butter and potatoes, have shot up this year. But the central bank's three straight rate hikes since June may be working, the top central banker signaled.
"Tough monetary conditions have evolved in the economy, which are to provide for inflation slowdown in coming quarters," she said, per TASS.
Russian business leaders have been complaining about the central bank's high interest rates, which they say are stifling business activities.
Sergei Chemezov, the CEO of the defense conglomerate Rostec, said in October that record-high interest rates were "eating up" the profit from the company's orders.
"If we continue to work like this, then most of our enterprises will go bankrupt," Chemezov said.
Economic cracks in Russia
Even Russian President Vladimir Putin on Thursday acknowledged that his country's economy is not in a good place β and he blamed the central bank and federal government.
The Russian leader said that the central bank could have used instruments other than interest rates to cool the economy and that the federal government could have worked with economic stakeholders to improve supply.
"There are some issues here, namely inflation, a certain overheating of the economy, and the government and the central bank are already tasked with bringing the tempo down," Putin said during his marathon annual press conference.
Price rises had been an "unpleasant and bad" outcome, he said.
Given the sweeping sanctions against Russia's economy, Nabiullina faces a challenging job to keep Russia's seemingly resilient economy going.
Economic cracks are emerging as the Kremlin focuses on shoring up its defense industry for its war in Ukraine β but at the expense of other sectors, Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center fellow wrote on Friday.
Prokopenko, a former Russian central bank official, wrote that growth momentum could stall next year, with social and fiscal challenges developing into crises around 2026.
Federal Reserve Chair Jerome Powell surprised markets on Wednesday evening.
Jacquelyn Martin/AP
The Federal Reserve cut its benchmark interest rate to between 4.25% and 4.5% on Wednesday.
The central bank also projected two cuts next year instead of four, sending stocks tumbling.
Here's how analysts, economists, and other experts reacted to the Fed decision and market reaction.
The Federal Reserve cut its benchmark interest rate on Wednesday to a range of 4.25% to 4.5%, bringing its decline since mid-September to 100 basis points.
Wall Street usually celebrates rate cuts as lowering borrowing costs drives spending, investing, and hiring. Reducing rates also signals inflation is under control, and makes risk assets like stocks relatively more attractive by trimming yields on safer assets like Treasuries.
Yet stocks tanked because Fed officials projected two cuts next year, down from four previously. Fed Chair Jerome Powell also said the central bank expects to ease its monetary policy more slowly in the months ahead.
Here's a roundup of how analysts, economists, strategists, investors, and other experts reacted to the latest Fed decision in their morning research Thursday.
Matt Britzman, senior equity analyst at Hargreaves Lansdown
"US markets played the part of Scrooge on Wednesday, tumbling as the Federal Reserve's hawkish tone dampened holiday cheer.
Investors should see this as a healthy spot of profit-taking rather than an end to the party, after what's been a fantastic run for markets since the US election."
Russ Mould, investment director at AJ Bell
"Markets are normally good at reading the signs, but the sell-off on Wall Street last night would suggest investors had started on the Christmas sherry a bit early and were caught out by the Fed's announcement about where rates might go in 2025.
The 3% drop in the S&P 500 is a wake-up call that US markets are not a one-way ticket to the moon.
The fact futures prices are showing a rebound in the main US equities on Thursday would suggest we are not at the start of a full-blown market correction. Instead, it's more likely that investors are now sitting up and paying more attention to what could go wrong, rather than only focusing on the positives. That's long overdue and a healthy development."
David Rosenberg, founder and president of Rosenberg Research
"This is a Fed that really has no faith in its view at any time and is willingly reactive as opposed to proactive even though its actions affect the economy with long lags.
You would have thought that between the commentary and forecast changes that the world has changed dramatically since the jumbo rate cut just three months ago. It clearly does not take much to cause this Fed to swing its view around. I can guarantee that it will shift again."
Stephen Koopman, senior macro strategist at Rabobank
"'We had a year-end inflation forecast, and it's kind of fallen apart.'
Not exactly the confidence-inspiring line you'd expect from a Fed chair. But Jerome Powell's performance at yesterday's press conference wasn't his finest hour. In what might have been the most uncomfortable showing of his tenure, Powell ceded the stage to the hawks, visibly strained as he tried to sell a strategy he didn't fully appear to endorse.
Powell flagged inflation 'moving sideways' and 'higher uncertainty' around its trajectory. These admissions reveal a central bank increasingly unsure of its footing, with rates markets now expecting just one cut for 2025 (as we do), and with no real consensus on when that final cut would arrive."
Jamie Cox, managing partner for Harris Financial Group
"Markets have a really bad of habit of overreacting to Fed policy moves. The Fed didn't do or say anything that deviated from what the market expected β this seems more like, I'm leaving for Christmas break, so I'll sell and start up next year.
The good news is that this 10-day sell-off should lay the path for a Santa Rally leading into next week."
Chris Zaccarelli, chief investment officer for Northlight Asset Management
"Santa came early and dropped a 25-bps rate cut in the market's stocking but accompanied it with a note saying that there would be coal next year."
The market is forward-looking and ignored the good news of today's rate cut and instead focused on the paucity of rate cuts for next year."
Jochen Stanzl, chief market analyst at CMC Markets.
"What was heard last night from the Fed as an accompaniment to the interest rate cut is a showstopper for the stock market.
The Fed is sending a clear signal that it has almost completed the phase of interest rate cuts. The year 2025 will be a significant break in the Fed's rate-cutting cycle.
The Trump blessing could quickly turn into a curse. If the market expects yields to rise further, it is unlikely that the Fed will intervene against these forces. If inflation data continues to rise in January and February, then that could be it for the interest rate cuts."
Adam Turnquist, chief technical strategist for LPL Financial
"While the Fed is taking all the heat for today's sell-off, a reality check from overbought conditions, deteriorating market breadth, and rising rates was arguably overdue.
Overall, today's FOMC meeting brought back some unwanted clouds of uncertainty over monetary policy next year. At a minimum, market expectations have shifted toward a shallower- and slower-than-anticipated rate-cutting cycle. Technically, the near-term risk remains to the upside for 10-year Treasury yields, creating a likely headwind for stocks."
Jean Boivin, head of the BlackRock Investment Institute
"The Fed has poured cold water on already dwindling market hopes for generous rate cuts in 2025.
Given the risk of resurging inflation from potential trade tariffs and a slowdown in immigration that has been cooling pressure in the labor market, market expectations of only two more cuts in 2025 now seem reasonable.
We expected this policy outcome, so it doesn't change our recently upgraded view on US equities. US stocks can still benefit from AI and other mega forces, from robust economic growth and from broad earnings growth β and we see them outperforming international peers in 2025."
Isaac Stell, investment manager at Wealth Club
"With an economy that's going gangbusters and an incoming president with a fiscally loose agenda, you wonder why the Fed felt it necessary to cut.
Is this to curry favor with the incoming administration or is there a bump in the road the Fed can see that the rest of us are missing."
Michael Brown, senior research strategist at Pepperstone
"The FOMC delivered about as hawkish a cut as they could muster up yesterday, and market participants were not particularly pleased about what they heard.
It was, though, a little perplexing to see such a violent market reaction to Powell's remarks, particularly considering how 'every man and his dog' had been expecting this sort of a pivot in the run up to the meeting.
It feels, though, as if markets have overreacted to Powell's message, and that we may have reached something of a hawkish extreme here
Consequently, I'd be a dip buyer of equities here, as strong earnings and economic growth should see the path of least resistance continuing to lead to the upside, offsetting the fading impact of the 'Fed Put.'"
On Wednesday, the Federal Open Market Committee announced its third consecutive interest-rate cut of the year, lowering rates by 25 basis points. Alongside the rate cut announcement, the Federal Reserve's quarterlySummary of Economic Projections also penciled in two interest-rate cuts for 2025, based on the median prediction from voting Fed members.
Markets took a dive after the Fed announcement, with the Dow Jones Industrial Average closing down over 1,100 points, or about 2.6%.
Fed chair Jerome Powell said during the Wednesday press conference that the decision to cut rates in December was "a closer call" but ultimately "the best decision" to achieve the Fed's dual mandate of maximum employment and price stability.
"I feel very good about where the economy is. Honestly, I'm very optimistic about the economy, and we're in a really good place. Our policy is in a really good place. I expect another good year next year," Powell said.
However, Powell said Trump's proposed tariff plans pose more uncertainty to the US economy in the coming year.
The president-elect has suggested he would impose broad tariffs on imports from key trading partners with the US, including China, Mexico, and Canada, which could lead to higher prices for imported goods.
At this point, Powell said there is too much uncertainty around Trump's trade plans to make any concrete predictions about next year's policy decisions at this point.
"We just don't know really very much at all about the actual policy, so it's very premature to try to make any kind of conclusion," Powell said. "We don't know what will be tariffed, from what countries, for how long, in what size. We don't know whether there'll be retaliatory tariffs. We don't know what the transmission of any of that will be into consumer prices."
Additionally, Powell said some FOMC members did consider fiscal policy, like tariffs, in their economic predictions, showing how the Fed is facing a range of uncertain scenarios in 2025.
He said that once Trump unveils his policies, the Fed would consider any necessary changes to its policy, but "we're just not at that stage."
Over the past year, Powell has reiterated that the Fed should move more cautiously instead of risking cutting rates prematurely and having to course correct later on. That's still the Fed's outlook going into the new year as the central bank continues its goal of reaching 2% inflation.
Amid economic progress over the past year, Powell said that inflation is coming down at a slower pace than the Fed would prefer. The consumer price index, which measures inflation, rose 2.7% year-over-year in November, a slight uptick from the 2.6% reading in October.
"When the path is uncertain, you go a little bit slower," Powell said. "It's not unlike driving on a foggy night or walking into a dark room full of furniture, you just slow down."
Affordability levels are still low with elevated home prices and mortgage rates. A huge jump in mortgage rates to around 6.8% today from under 3% in 2022 has also created a "lock-in" effect, where existing homeowners don't want to sell into a higher mortgage rate environment than when many of them bought β further limiting home inventory coming onto the market and sending prices soaring even higher.
There's reason to be optimistic, though. The US housing market will see more favorable buying conditions in 2025, according to Danielle Hale, chief economist at Realtor.com. Hale sees two trends that will help encourage existing homeowners to put their homes up for sale.
Existing homeowners have built up home equity
Existing homeowners have reaped big home equity gains in recent years thanks to rapidly rising home values.
Homeowners are also increasing their home equity by making monthly mortgage payments, as those who bought houses a few years ago have had the opportunity to make a sizable dent in their mortgage, Hale said. Homeowners with a smaller mortgage balance may be less sensitive to the higher interest-rate environment of today's housing market.
According to Lawrence Yun, chief economist of the National Association of Realtors, homeowners are feeling richer now thanks to the home equity they've accumulated over the last few years of dizzying home price increases. As a result, more listings are being put on the market.
"If they're using their home equity to make a move, that enables them to either be a cash buyer or take out a very small mortgage," Hale said. "That gives them a bit more flexibility in today's market."
Mortgage rates may become less important to buyers and sellers
Homebuying decisions can also be influenced by factors other than mortgage rates or home prices, according to Hale.
The more time that passes since a homeowner's initial purchase, the more likely it is that they'll have a life change requiring them to move, regardless of the cost of moving, Hale said.
People buy houses for reasons other than financial ones, Hale pointed out. Big life changes that could spur a move include a new job, retirement, marriage, or having children.
"All of these can be reasons that people might make a move even if the costs are more expensive to buy a home," Hale said.
Additionally, consumers might be getting accustomed to high mortgage rates, according to Redfin.
"Buyers realized mortgage rates may not drop below 5%, and probably not below 6%, in the near future," Mimi Trieu, a Redfin real-estate agent, said. Existing homeowners holding off on moving due to high mortgage rates may soon give up on waiting it out.
A more "buyer-friendly" housing market
These changes won't be immediate, but they will have a noticeable impact on the housing market, according to Hale. She believes that the housing market is trending in a more "buyer-friendly direction."
"It's going to take more time," Hale said of the lock-in effect. "But as it diminishes, that's going to free up more sellers."
Lower interest rates β and subsequently, lower mortgage rates β would certainly speed up the erosion of the lock-in effect, Hale said. However, even if mortgage rates hover around the 6% range in 2025, which is what Realtor.com expects, the lock-in effect will still fade.
Homebuyers could see a notable change by the end of next year, Hale predicted.
"In mid-2024, 84% of homeowners with a mortgage had a mortgage rate under 6%. We think that by the end of 2025, that share will be 75%," Hale said.
Sarah Meyssonnier via Pool; Alex Brandon/AP Images; Alyssa Powell/BI
Sky-high credit-card interest rates are not popular. The idea of capping them, however, is popular β which is why politicians on both sides of the aisle are talking about limiting just how high credit-card companies can drive their rates. The issue is making for some perhaps unexpected bedfellows, a potential team-up you wouldn't expect. Such a cap would be a very big deal, shaking up the industry and Americans' access to credit. But just because both sides have hopped onto the idea doesn't mean it will actually happen. That will come down to whether everyone's actually serious about it, and there are reasons to have some doubts.
On the campaign trail, now-President-elect Donald Trump floated the idea of putting a temporary cap of 10% on credit-card interest rates to let people "catch up" on their debt, declaring that "we have no choice" but to do it. Now that he's headed to the White House, the message coming from some progressive voices is basically: OK, go ahead. Sen. Bernie Sanders said on X that he looked forward to Trump "fulfilling his promise" for an interest-rate cap, and reiterated the point in a recent interview with Business Insider. "He said, you know what, credit-card interest rates, which in some cases right now are 20, 25%, should not be higher than 10%. Well, you know what? I agree with that," Sanders said. Sen. Elizabeth Warren is singing a similar tune. "Bring it on," she said in an interview with Politico.
The banks and credit-card companies are not happy about the notion of a rate cap β the financial industry has a tendency to set its hair on fire whenever there's a whiff of a threat to a revenue stream. In reaction to Trump's campaign-trail remarks, the American Bankers Association said a rate cap would "result in the loss of credit for the very consumers who need it the most" and push them toward "less-regulated, more risky alternatives including payday lenders and loan sharks."
Matt Schulz, the chief credit analyst at LendingTree and the author of "Ask Questions, Save Money, Make More," said there's "no question" a 10% interest-rate cap would have a significant impact, which could include credit being restricted and rewards being reduced. "But it's always important to remember that the banks have lots of buttons to push, lots of levers to pull to regain revenue," he said.
Perhaps the bigger point here is that in an election year in which people expressed their dissatisfaction with the state of the economy, politicians have identified a salient issue that could seemingly help alleviate many Americans' financial burden. And when there's a seemingly popular solution, a lot of politicians want to hop on board. Focusing on credit-card companies and banks is an obvious move to speak to average people's money-related concerns, whatever your political stripes. Actually delivering that relief, however, is another question entirely.
You probably don't know exactly what your credit-card interest rate, or annual percentage rate, is β that's fine; a lot of people don't β but if you take a look at it, you might be surprised to see just how high it is. The average credit-card interest rate for new card offers is 24.43%, according to LendingTree β up about 10 percentage points from a decade ago. Interest payments are also becoming an increasingly important moneymaker for credit-card companies β the Consumer Financial Protection Bureau estimates they earned an extra $25 billion in revenue in 2023 by raising their rates. The margins they're making on APRs on revolving credit, meaning debt consumers carry month to month and don't pay off, are now at a record high.
"Obviously, the interest rates have to respond to changing market conditions, and we've definitely seen that happen. But we've seen that at the same time, they're baking in additional margins into those rates that go toward profit," said Julie Margetta Morgan, the associate director of research, monitoring, and regulations at the CFPB."It's connected to the use of APRs as a center for profitability."
Margetta Morganpointed to rewards. While credit-card rewards have typically been funded by interchange fees β the small fee a merchant pays every time you swipe your card β issuers are using interest rates paid on debt to fund them, too.
"Increasingly, the interchange may not be covering the cost of the reward programs or generating profits that justify the rewards," she said. "And then you can see rewards go from a program to entice people to spend more to drive interchange revenue to a program to entice people to spend more so that they end up revolving and paying interest."
These higher interest rates are also coming at a time when Americans have a lot of credit-card debt. Credit-card balances in the US rose to a record $1.17 trillion in the third quarter of the year, according to data from the Federal Reserve Bank of New York. You can see the problem. And as interest rates increase, it's becoming even more expensive to deal with the debt. Given this double whammy, a lot of people see an interest-rate cap as a solution: Schulz said that in LendingTree's surveys, about three-quarters of consumers supported a cap on credit-card interest rates, and of those who do, two-thirds said they'd support it even if it meant lower rewards. Six in 10 said they would support it if it meant less access to credit for people with not-so-great credit scores.
"It's not hard to understand the frustration," Schulz said.
On its face, a 10% interest-rate cap sounds like a good deal to a lot of consumers, especially at a moment when interest rates are so high. (Seriously, for some retail cards, APRs are in the 30s.) It also sounds like a good idea to populist-minded politicians, from Trump to Sanders. As to what it might look like in terms of policy, it's complicated.
Chi Chi Wu, a senior attorney at the National Consumer Law Center, told me they would "welcome the conversation" about a national interest-rate cap, though she expressed some doubt that Trump was serious about it, given that Elon Musk posted "Delete CFPB" a few weeks ago on X. "I question the sincerity of the Trump team's willingness to protect consumers when one of their key people, Elon Musk, has called for the abolishing of the most important agency protecting consumers' wallets," she said.
Musk aside, Wu said consumer advocates have generally supported rate caps at a national level. High interest rates can make debt impossible to pay off, leading people into a spiral where the amount they owe just keeps growing even as they try to pay it off. This is often true of predatory payday lenders, but it can also apply to credit cards β if you owe $5,000 on a store card and pay just the minimum $25 a month, you're in trouble. While some states have caps, lenders are usually able to get around them by setting up shop somewhere else. Banks charge interest rates in accordance with the states they're based in, not where their customers might live. On the other side, banks and credit-card issuers say that a 10% rate cap would ultimately come back to bite consumers β high interest rates allow these companies to make up for losses incurred from risky borrowers declaring bankruptcy or otherwise failing to pay back debt, and they say if they can't charge the high rates, they can't take on the risk. If that revenue stream shrinks, the issuers argue they would have to cut back on rewards and stop issuing credit cards to people with low credit scores and low incomes. To some extent, of course, banks will say that because they don't want any threat to any revenue stream. At the same time, a cap would make an impact on their balance sheets, though it's not entirely clear how severe it would be.
An interest-rate cap would likely cause some disruptions, but banks and credit-card companies are very good at figuring out how to make things work and keep growing their businesses.
Natasha Sarin, a law professor at Yale and former counselor to Treasury Secretary Janet Yellen, has been a quite vocal critic of the proposal for a 10% rate cap. In a Washington Post op-ed, she said it would make credit cards harder to get, especially for riskier borrowers who might then turn to payday lenders that get them into even more trouble. She points to the Credit Card Accountability Responsibility and Disclosure Act, which became law in 2009. Among other measures, the law requires issuers to notify customers of interest-rate increases 45 days in advance, limits some fees, and restricts credit-card companies from targeting consumers under 21. Sarin argues that while the CARD Act saved consumers $12 billion a year from the regulations overall, some people were harmed and shut out of the system.
"Certain types of borrowers found that their cost of credit increased and got less access to credit. These were often younger people without credit history," Sarin told me in an interview.
Aaron Klein, a senior fellow in economic studies at the Brookings Institution and former deputy assistant secretary for economic policy at the Department of Treasury under President Barack Obama, echoed the argument that a 10% rate cap is "too low" and would be a mistake. He said he would be more comfortable with a 36% cap β the limit for interest rates on consumer loans for active-duty service members under the Military Lending Act. Basically, if that's a good protection for the military, everyone should get access to it. "Thirty-six percent has proven to be a more politically and more sustainable cap for unsecured lending," Klein said.
Of course, there's a lot of space between 10% and 36%. Sanders and Rep. Alexandria Ocasio-Cortez introduced a bill in 2019 proposing a 15% cap, though it didn't get far. Margetta Morgan, from the CFPB, pointed out that credit unions have an 18% rate cap and are able to make it work.
"The data that CFPB has suggests that credit unions have been able to offer credit to a variety of people at or below that cap successfully over the years," she said. "And the big problem that they have is that they actually can't compete with the larger credit-card issuers who have the larger budgets for rewards programs, advertising, and merchant partnerships and pay for that increasingly with high interest rates."
An interest-rate cap would likely cause some disruptions, but banks and credit-card companies are very good at figuring out how to make things work and keep growing their businesses. They've done it before.
After the CARD Act, things were "chaotic" for a while, Schulz said, and one credit-card issuer went as far as to jack up its interest rate to 79.9%. "But then eventually everything settled back down into where we are now and record profits and that sort of thing," he said. "That's probably similar to what we would see if a rate cap hit. There would be a little bit of chaos for a while while banks figured out how to make their money again, and then everything would go forward."
As mentioned, as much as one can debate the policy implications of an interest-rate cap, the politics of it are the primary issue. The central question is how serious politicians in Washington are about making it happen. Nearly every person I reached out to for this story opened with the caveat that they think a 10% cap is not a serious proposal from the president-elect. Consumer advocates say that while, sure, they're delighted to talk about it, just like Sanders and Warren, they do not see Trump putting it high on his priorities list.
When Trump said that, that was pandering with zero forethought and zero commitment.
"Smoking out the false populism of Trump's actual policies, as opposed to his rhetoric, can never be a bad thing," said Carter Dougherty, the communications director at Americans for Financial Reform, a consumer-advocacy group. "That said, color me skeptical that the Trump administration or congressional Republicans will actually try to do something to bring down the high costs of credit cards."
"When Trump said that, that was pandering with zero forethought and zero commitment," Klein said. He added that in 2016, Trump campaigned on implementing an updated version of Glass-Steagall, which separated commercial and investment banking and was repealed in 1999. "Once elected, he immediately moved to deregulate the banks," Klein said.
The Trump transition team did not respond to a request for comment.
A rate cap isn't the only solution to America's ballooning credit-card-debt problem and just how expensive it is to carry debt. The credit system is very complex, and reasonable minds might disagree on what's the right fix. Some consumers may be willing to give up rewards if that means a fairer, less expensive setup; others won't. One could also argue that the required minimum payments on credit cards should be higher so that people don't languish in debt for so long, or that it's actually OK for some people to not have access to endless amounts of credit they have no chance of paying back. Even if immediate action might not be on the table, that politicians are paying attention to the issue at all indicates there's a problem.
Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.
Russian President Vladimir Putin said his country should increase the supply of goods and services to fight inflation.
Getty Images
Russian President Vladimir Putin has urged his government and central bank to curb Russia's 8% inflation rate.
Russia's inflation target is 4%, with interest rates at a record high of 21%.
The high interest rates are pressuring businesses and hurting the cash savings of ordinary people.
Russian President Vladimir Putin appears to be signaling to his government and the central bank to put aside their differences to tackle a critical problem for businesses and regular people alike: inflation.
Russia's inflation rate is 8% compared to a year ago, which Putin acknowledged was "a relatively high level."
"It is imperative to avoid any misalignment in key macroeconomic indicators and prevent sectoral imbalances, which undeniably includes the necessity of controlling inflation," the Russian leader said at an investment forum in Moscow on Wednesday.
Putin doubled down on "coordinated joint efforts" from the Russian government and the central bank to curb inflation, echoing comments he made in August.
"I would like to stress that this is not just a recommendation or a proposal β this is a guide to action, as I see it," he said on Wednesday, adding that the two groups are already coordinating.
Russia's inflation target is 4% and Putin said the country should increase the supply of goods and services to fight inflation, per TASS state news agency. Before the pandemic and war in Ukraine, the country's inflation rate β like that of many peers β was much lower, hitting 3% in December 2019.
Putin's comments come amid recent complaints from Russian business elites that they are sick of propping up the country's economy as interest rates soar to record levels in the country's wartime economy.
In October, Russia's central bank hiked its key interest rate to a high of 21% to tame prices, intensifying criticisms β from business leaders, lobby groups, and the government β against Russian central bank governor Elvira Nabiullina's policies.
Sergei Chemezov, the CEO of the defense conglomerate Rostec, said in October that record-high interest rates were "eating up" the profit from the company's orders.
"If we continue to work like this, then most of our enterprises will go bankrupt," Chemezov said.
One of Russia's top bankers told Reuters late last week that a high interest rate may not help much given high defense expenses and sanctions.
Price raises in Russia are making life very expensive β butter and potatoes cost substantially more than they did at the start of the year β and eating into people's savings.
The cash savings of Russians are now at all-time low of 15.9 trillion rubles, or $151.5 billion, due to high interest rates, VTB β Russia's second-largest lender β said on Wednesday. That figure does not include foreign currency holdings, which VTB estimates are about $94 billion.
Analysts polled by Reuters expect Russia's central bank to raise its key interest rate to 23% at its December 20 meeting. But Nabiullina said it was not predetermined, the news agency reported on Wednesday.
Nabiullina also pushed back on the notion that the central bank's tight monetary would spur a recession.
"Economists of the Central Bank believe the economic potential is on the rise and will continue growing in the next year," she said at Wednesday's forum in Moscow, per TASS.
"This is the result of large-scale investments in the upgrade of the economy during the last three years. If the potential is growing steadily, then this means also more space for demand growth," Nabiullina said.
Home prices in 2025 should appreciate slowly but steadily, Realtor.com said.
Art Wager/Getty Images
Realtor.com just unveiled its 2025 housing market outlook.
Home values should rise slightly next year as property sales pick up due to lower mortgage rates.
However, rent should stay in check due to a massive influx of apartment inventory.
Property owners, prospective buyers, renters, and landlords should expect more of the same in the new year β for the most part.
Home sales and the cost of buying or renting won't be much different in 2025, Realtor.com said in its housing forecast published on December 4. The firm's researchers see sales inching 1.5% higher while home prices climb 3.7% β in line with the rate they've risen since 2012 β and rent stays roughly flat at -0.1%. Mortgage rates should also slide slightly, though they'll stay north of 6%.
Those modestly positive projections are based on what Realtor.com expects to be a healthy economic backdrop typified by lower interest rates and steady growth. The Federal Reserve will likely cut rates in December and then a few more times in the first half of the year, the firm said.
"Prices are going to keep rising because we're not going to have a recession," said Ralph McLaughlin, a senior economist at Realtor.com, in an interview with Business Insider ahead of the report's release. "If you look at the times that home prices fall, it's typically only when there's a recession, and only when people are forced to sell."
In addition, it's unclear how President-elect Donald Trump's policies will affect the US housing market, though stock market strategists generally agree that tax cuts and deregulation will boost business confidence. McLaughlin thinks that may have a trickle-down effect for homebuyers.
"If you're talking about the resale market, the existing homes market, it's hard not to become optimistic about just the broader economy, because of things like tax cuts and other benefits to households that might put more money in their pocket at the end of the day," McLaughlin said. He added: "That might encourage them to go out and either buy a home, if they don't currently own one β or grade up to a house maybe they've been waiting to over the last few years."
High on supply
While that backdrop mostly represents business-as-usual, next year's housing market may be marked by a significant development: sizable increases in home and apartment supply.
A long-running home shortage is finally easing, as Realtor.com predicts that 2025 will be the first "balanced" housing market in nine years, meaning neither buyers nor sellers will have disproportionate leverage. That's thanks to an 11.7% jump in existing home inventory and a 13.8% surge in single-family home starts.
Home listings have beenΒ on the riseΒ recently in most of the 50 largest US real-estate markets, which defies what Realtor.com had thought would be a big drop in inventory this year. However, there's still a shortfall of 3.7 million homes in the US, Freddie Mac estimates.
Realtor.com
Continued supply improvements mean there should be 4.1 months of homes available in 2025, up from 3.7 months now, Realtor.com said. The National Association of Realtors, a competing firm, reported last month that there's already 4.2 months' supply of existing homes available.
Rental inventory is also on the rise, as real-estate site Zumper found that the supply of new apartments in the US hit its highest level in five decades this summer.
That dynamic should cause rent growth to stall, McLaughlin said. Home prices likely won't suffer a similar fate, in his view, because single-family supply will come online slower.
"What we've seen over the past couple years is a large uptick in new multi-family construction, and they tend to be released all at once," McLaughlin said. "And so it can have very sharp and especially isolated impacts on rents β in particular β in urban areas where they are built."
With more options, renters won't be forced to endure the abnormally large rent hikes that became more common during and after the pandemic.
Landlords might also struggle to raise rent substantially in a strong economy with lower mortgage rates since renters could walk away from bidding wars and look at houses instead.
"When incomes grow enough in the rental segment, those renters tend to convert over to owners," McLaughlin said. "They typically won't use their incomes to bid up rents more β they'll just go and, if they can afford it, they'll go buy a house."
McLaughlin continued: "So those that continue to stay renting, landlords don't have the ability necessarily to raise rents at the rates that price growth plays out in most markets."
Still, inventory increases likely won't translate to meaningful discounts on homes or rental units. Prices almost always rise over time along with the population size and money supply, so while apartments may be easier to find, those pining for pre-pandemic prices could be disappointed β even in an otherwise solid year.
Russian President Vladimir Putin said there was no reason to panic about the ruble's slide.
REUTERS/Yves Herman
Russian President Vladimir Putin said the ruble's plunge to two-year lows was no cause for panic.
The Russian currency hit its lowest level against the dollar since March 2022 this week.
Analysts say Russia is under pressure from inflation, military spending, and falling oil prices.
Russians shouldn't stress about the ruble tumbling to two-year lows, Vladimir Putin said Thursday. Analysts told Business Insider there was plenty of cause for concern.
The Russian leader told reporters that the "situation is under control" and that "there are absolutely no grounds for panic," according to a Google translation of a report from the RIA Novosti news agency.
Putin attributed the ruble's fluctuations "not only to inflation but also to budget payments and oil prices," along with many seasonal factors.
The Russian currency traded at 114 to the dollar on Wednesday, its weakest level since March 2022, shortly after the Ukraine invasion began. It was about 84 in early August, meaning the currency has depreciated by 36% in under four months. A greenback was worth about 108 rubles on Friday.
Russia's central bank stepped in to shore up the floundering ruble on Wednesday. It suspended purchases of foreign currency on the domestic market for the rest of this year to reduce volatility.
A Wednesday headline in the state newspaper Rossiyskaya Gazeta read, "Panic attack for Russia's currency market." The Kommersant newspaper warned readers to "buckle up your rubles."
The ruble's latest plunge follows the US sanctioning Gazprombank, one of Russia's largest lenders. The restrictions limit the bank's ability to access global financial markets and handle energy payments.
Russia also fired a hypersonic missile into Ukraine last week after its opponent launched missiles at targets inside Russia for the first time. The escalation has raised concerns of further economic disruption.
A weakening ruble benefits Russian exporters by making their goods more competitive in global markets. But it threatens to accelerate inflation by raising the cost of imports, leaving sellers little choice but to increase their prices. Stubborn inflation has already spurred Russia's central bank to raise the main interest rate to 21%, the highest level since 2003.
The Russian economy has suffered from Western sanctions imposed since Putin's invasion of Ukraine, with energy revenue tanking by almost a quarter last year. Other countries, such as India, have snapped up Russian oil instead, tempering the impact of price caps and other penalties.
Mounting pressure on Russia
Robin Brooks, a senior fellow focused on the global economy and development at the Brookings Institution, posted on X that the ruble's collapse shows how vulnerable Russia is to sanctions.
He also said the European Union's reluctance to impose certain penalties might have staved off economic disaster in Russia.
The collapse of Russia's Ruble (black) is a reminder how badly the EU failed on Russia. It follows the recent US sanctioning of Gazprombank, which the EU opposed for a long time. Russia could have been sent into deep financial crisis 2 years ago. The EU didn't let that happen... pic.twitter.com/XbOwqiABRd
George Pavel at the trading platform Naga.com told BI the ruble's dive had been driven by rising inflation and a widening budget deficit fueled by heavy military spending.
"Russia's economic path looks unsustainable barring major changes," he said, ticking off concerns such as slowing growth, stubborn inflation, a tight labor market, and the massive cost of the Ukraine war.
Brent crude is trading at just over $70 a barrel, and sliding oil prices pose an existential threat to Russia, said Kathleen Brooks, research director at XTB.
"Russian income is shrinking at the same time as defense spending is surging as the war with Ukraine enters a more intense phase," Brooks said. "While President Trump may go some way to ending the Russia-Ukraine war, his policy on energy and plans to get the US pumping even more oil could weigh on the oil price further in 2025, which is bad news for Russia."
Donald Trump's latest tariff threats have set alarm bells ringing on Wall Street.
The president-elect said he would impose tariffs on exports from Mexico and Canada, as well as China.
Analysts warned of a trade war, volatility, steeper inflation, and a flight to safety in markets.
Donald Trump rattled financial markets late Monday by warning he would slap 25% tariffs on Mexican and Canadian exports to the US until the flow of illicit drugs and illegal migrants into America stops. He also said he'd impose another 10% tariff on imports from China until the drug problem is resolved, in addition to the 60% he proposed during the election campaign.
Analysts said the president-elect's latest threats could presage tariffs on other countries' exports and escalate into a full-scale trade war. They also said it could fuel volatile trading and a flight to haven assets in markets. There's also the threat of stoking inflation, meaning interest rates stay higher for longer.
Here's what analysts and commentators are saying:
George Saravelos, global cohead of FX research at Deutsche Bank
"Free trade agreements are not safe.Canada and Mexico are part of the USMCA which was negotiated by Trump himself. It is clear that even countries with existing agreements with the US can be subject to tariffs.
"The softer the market reaction, the greater the likelihood of more tariffs.The equity market reaction has so far been very benign, we would argue likely on the back of the transactional interpretation. That US domestic small-caps have been leading the recent market rally also helps reduce the impact. The first Trump administration showed that the more benign the market reaction, the greater the likelihood of further escalation."
Dan Coatsworth, investment analyst at AJ Bell
"If those tariffs are at the top of his agenda, there is now an elevated risk they will be closely followed by punishing tariffs on other countries. Trump clearly wants to make his mark and show he's the boss.
"There has been a view among some investors that Trump's tariff talk was a negotiating tactic, a threat rather than a promise. That might still end up the case, but it's clear that the president-elect has no intention of backing down for now."
Matt Britzman, senior equity analyst at Hargreaves Lansdown
"European equity markets braced for a sharp drop on Tuesday as Trump's tariff threats against China, Mexico, and Canada sent shockwaves through global sentiment.
"The president-elect's scorched-earth approach has stoked fears of a trade war, with investors increasingly wary that Europe could be next in his crosshairs."
Nigel Green, CEO of deVere Group
"These tariffs will not only drive up costs for companies but also fuel inflation, which could lead to further tightening of monetary policy.
"Markets hate uncertainty, and the prospect of a full-blown trade war will send investors scrambling to reassess their exposure."
Mark Haefele, chief investment officer of UBS Global Wealth Management
"While investors are once again on edge following Trump's latest tariff threats, we think markets also recognize that the risks of higher inflation and interest rates are implicit constraints on his policy agenda, with eventual policy outcomes potentially less inflationary than some investors previously feared.
"We see further volatility ahead, but we also expect US Treasury yields to fall in the year ahead following a 65-basis-point rise over the past two months."
Ruben Ferreira, FlowCommunity
"The medium to long-term outlook could shift if trade tensions escalate, potentially disrupting international trade relations.
"Such developments may heighten market uncertainty, driving increased demand for safe-haven assets such as gold as investors seek protection against market risks and economic instability."
The winter tends to be a quieter stretch for the rental market.
Michael Lee/Getty Images
Apartment prices didn't move much in November, but they may slide in early 2025.
Landlords tend to cut prices during the winter, and some are even giving unusual perks.
Here are 12 cities where rent is affordable and on the decline.
Fewer people are moving during a seasonally slow stretch in the rental market, but those who are looking for a new apartment soon may be in luck.
Rent was flat or down across the US in November, a recent report from real-estate site Zumper found. The cost of one-bedroom apartments was little changed for a fourth straight month at $1,534, while two-bedroom setups were modestly cheaper, down 0.4% from October at $1,902.
These findings suggest that the long-standing stalemate on price between landlords and tenants is dragging on, though the path of least resistance may be lower later in the coming months.
"Most renters who were planning to move this year have already done so, and property owners tend to price down units to fill vacancies before the holidays," Zumper's team wrote in the report.
So, while softer demand and limited apartment supply have offset each other, property managers hoping to be fully booked may have to cut prices or get creative with concessions. One such perk β unusual as it may sound β is free groceries for a year, Zumper researchers noted.
"We anticipate that national rents will continue to see modest declines through the rest of this year and likely into the beginning of next year as well," Zumper CEO Anthemos Georgiades said in a statement for the report.
Even if renters score savings this winter, apartment prices remain 2.3% to 2.5% higher than they were a year ago, according to Zumper. However, that's still below the official inflation rate of 2.6% and well under the 4.9% jump in the shelter price index.
Zumper
If price growth continues to fade next year, interest rates should tick down, and mortgage rates would follow suit. That would be a boon for homebuyers, though renters could also benefit since more people buying houses would likely mean less intense competition for apartments.
"Easing inflationary pressures could drive further declines to national rent prices and pave the way for additional interest rate cuts by the Federal Reserve," Zumper researchers wrote.
12 cities with attractively priced apartments
Although the national rate for one-bedroom rent didn't budge this month, there are a dozen midsize or large US cities where apartments are reasonably priced and heading down.
Below are the 12 cities where rent was at least $250 cheaper than the national median price of $1,534 in November and less expensive than 12 months ago. Along with each market are its year-over-year and month-over-month rent changes and its median rent, the savings compared to the national median, and its rank among the 100 top US real-estate markets.
The "Shark Tank" investor and real-estate tycoon pointed to "disturbing" data from the 2024 NAR Profile of Home Buyers and Sellers during a recent interview on "Cavuto: Coast to Coast" on the Fox Business Network.
The founder of The Corcoran Group said the share of first-time buyers dropped from 32% last year to a record low of 24%. The percentage of cash buyers β who tend to be investors or second-home buyers β hit a record high of 26%. Plus, the median age of first-time buyers climbed from 35 to 38.
The report suggests that first-time buyers are increasingly being outbid by investors or people buying second or third homes who are paying in cash, and many are having to wait until they're nearly 40 to become homeowners.
All about that rate
The median sale price for existing homes rose 4% to $407,200 in October, marking the 16th straight month of year-over-year price gains, per the National Association of Realtors. Sales did rise 2.9% from a year earlier, the first year-over-year increase since the summer of 2021.
Corcoran said transactions had picked up because buyers were used to higher rates and "got tired of waiting" for them to dip. Yet she emphasized that a significant fall in rates would be "incredible" for home sales.
"Anything with a 5% in front of it is going to make this market go ballistic," she said.
Bankrate data shows the average 30-year mortgage rate soared from 3.2% at the end of 2021 to a two-decade high of 7.9% in October last year, but has since dropped to 6.9%.
President-elect Trump's plans to cut taxes and impose tariffs have stoked fears that price growth could accelerate, pushing rates higher. "Inflation is on everyone's mind and I think it's risky," Corcoran said.
She predicted mortgage rates would hover around 6% or go lower. Any rise "would slow down the market, it would slow down the whole economy, it would slow down all the support services for the housing market β it would be a terrible thing."
Corcoran also dismissed concerns that the housing market is overheated and headed for a slump. She cited the low percentage of home purchases made as investments, saying a surfeit of investors "creates a bubble big time."
"This is nothing like the last bubble," she said. "I don't see a bubble at all."
Russian central bank governor Elvira Nabiullina said the bank plans to lower the key interest rate next year β barring "external shocks."
Vladimir Pesnya/Epsilon/Getty Images
Russia's central bank has been hiking its key interest rate to combat inflation.
Top central banker Elvira Nabiullina says the fight is almost over, with inflation expected to slow.
Business leaders have slammed Russia's increasing interest rate, saying it restricted their growth.
A key Russian official said an economic turnaround is on the horizon.
Russia's top central banker, Elvira Nabiullina, told the government yesterday that the country is approaching a "turning point" for inflation and interest rates, Moscow-based RBC Group reported.
Nabiullina told the State Duma that inflation should slow, though she did not specify when that would happen. Inflation hit 9.8% in September.
"We believe that our policy will reduce inflation to 4.5 to 5% next year, and then stabilize it near 4%. As it slows down, we will consider a gradual reduction in the key rate. If there are no additional external shocks, the reduction will begin next year," she said.
She indicated that credit activity is slowing because of the higher rate but said some industries have continued borrowing.
Soaring prices and a difficult outlook on the ground
Nabiullina's comments come as the war in Ukraine approaches its three-year anniversary and inflation in Russia hits sky-high levels.
Last month, to tame prices, Russia's central bank hiked its key interest rate to a record high of 21%. The bank said earlier this month that it could hike the key rate again at its next meeting in December.
The government continues to spend big on defense. In September, Russia hiked its 2025 national defense state spending by 25%, to over $145 billion, signaling its resolve to continue its war in Ukraine.
For ordinary Russians, the effects of inflation are being felt on the ground level. The cost of staples like butter and potatoes is up over 25% each this year.
And while Nabiullina's comments this week indicate a positive change is near, other leaders in Russia have expressed a gloomier economic outlook.
Andrei Klepach, the chief economist at the state-run development entity VEB.RF, predicted that, in the best case, economic growth would fall from an estimated 2.5% to around 2% in 2025. He also downgraded Russia's fixed capital investment growth from 1.9% to 1%, blaming the central bank's key rate.
Alexander Shokhin, the president of the Russian Union of Industrialists and Entrepreneurs, said high interest rates were forcing companies to delay investments.
Boomers are staying put and not moving, says Meredith Whitney.
Joe Raedle/Getty Images
Meredith Whitney expects home prices to fall by 10% to 20% as the frozen housing market starts thawing.
The veteran researcher said baby boomers aren't selling, restricting the number of homes available.
Prices rose in September but existing-home sales fell and the share of first-time buyers remained low.
Home prices are poised to fall by up to a fifth as the frozen housing market thaws β and that could help baby boomers sell at last and younger people to become homeowners, Meredith Whitney says.
"It's got to be a two-step process," the CEO of Meredith Whitney Advisory Group told the Financial Sense Newshour podcast in an episode released Saturday.
"You have to have rates come down, but you also have to have home prices come down," she said about revitalizing the housing market. "One doesn't work on its own."
Homebuyer headaches
Housing transactions have stagnated in recent years as soaring prices and steeper mortgage interest rates have fueled an affordability crisis.
Homeowners who locked in cheap mortgages are reluctant to sell and give them up. Prospective buyers are similarly unwilling to pay top dollar for a worse house than they imagined and take on a larger monthly mortgage payment.
Some relief has come from the Federal Reserve cutting its benchmark rate by 75 basis points since September to as low as 4.5%. The central bank raised the rate from virtually zero to as high as 5.5% between March 2022 and July 2023.
Even so, the median existing-home price jumped 3% to $404,500 in the 12 months to September, per the latest National Association of Realtors data.
Existing-home sales fell 3.5% over the same period, and first-time buyers were responsible for 26% of sales in September, in line with lows hit in August this year and November 2021.
Price declines and baby boomers
Whitney was dubbed the "Oracle of Wall Street" after correctly predicting the 2008 financial crisis, which was precipitated by the collapse of a massive housing bubble.
She predicted house prices would fall by 10% to 20% from here, and urged the government to "sit back and let that happen" because that would only lower them to 2020 or 2021 levels. Homeowners would likely despair a sharp drop in the value of their homes, but many have built huge amounts of home equity over time, she said.
As for why younger millennials and Gen Z are struggling to get on the housing ladder, Whitney pointed to homeowners in their sixties and seventies staying put.
"The problem is the baby boomers own 60% of the housing stock," she said, referring to single-family, owner-occupied homes. "They're not moving."
"The older people aren't selling; they have no place to go," she continued, adding that they "can't afford to move." She highlighted increases in property taxes, homeowners' insurance, and homeowners' association fees as one source of financial strain, especially for those on fixed incomes.
Whitney described the situation as a "generational schism" in a CNBC interview last week and warned there will be a "real standoff between sellers and buyers" until more inventory becomes available.
Several economists have predicted a "silver tsunami" as baby boomers sell their homes to downsize or move into care homes, increasing the available supply of single-family homes and reducing prices.
However, a recent survey found that 54% of older Americans intend to remain in their current homes for life, while only 15% said they planned to sell in the next five years.
