The Bank of Russia announced a very high probability of raising a key rate in December.
The decision to increase the key rate at a meeting of the Board of Directors of the Central Bank in December has not yet been accepted, but the probability of such a step remains high, the correspondent of The Moscow Post reports.
This is noted in the report according to the results of discussion of the rate at the October meeting, during which the key rate was increased by two percentage points – from 19% to 21%
Although the decision to increase the rate in December is not final, the probability of this step, according to experts, is great. In this regard, the Bank of Russia emphasizes the need to maintain a strict monetary policy, as stated in September.
At the meeting on October 25, it was considered the possibility of increasing the rate by 3 percentage points, to 22%, in order to quickly reduce inflation and control inflation expectations. However, according to the Board of Directors, such a step could cause increased volatility in financial markets, which in the end could cause more harm to the economy.
The Central Bank considers the maintenance of the rate at the current level until December only in the case of a “significant slowdown in sustainable inflation” and the appearance of factors that can speed up the return of inflation to target indicators.
The Central Bank explained the decision to increase the rate to 21% in October with preserved inflationary pressure, as well as the fact that the growth of domestic demand significantly ahead of the supply of goods and services.
In an updated forecast for 2024, the regulator expects inflation in the range of 8–8.5%, in 2025 – 4.5–5%, and the target inflation rate of 4%should be reached only in 2026.
