Bank of Russia keeps key rate at 4.25%

For the second time in a row, the Bank of Russia kept its key rate at 4.25% per annum, while noting the prevalence of disinflationary risks in the medium term.

As noted in the regulator's message, inflation is developing following the Bank of Russia's forecast, and by the end of this year, it is expected to be in the range of 3.9-4.2%.

"There is a worsening of the epidemiological situation in the world and Russia. The situation in the external financial and commodity markets remains unstable; increased volatility may persist in the near future, including considering geopolitical factors. The population and enterprises' inflationary expectations have grown, which is largely due to the exchange rate dynamics. In the mid-term horizon, disinflationary risks still prevail; however, the effect of short-term pro-inflationary factors has increased somewhat," the Central Bank says in an official statement.

According to the Bank of Russia forecast, annual inflation will be 3.5–4% in 2021 in the context of the monetary policy being pursued and will remain close to 4% in the future.

Next year, experts predict a recovery growth of the Russian economy by 3-4%.

According to forecasts, in 2022–2023, GDP will grow by 2.5–3.5 and 2–3%, respectively.

The next meeting of the Bank of Russia Board of Directors, which will consider the key rate issue, is scheduled for December 18, 2020.