Central Bank kept key rate at same level

For the fifth time, the Board of Directors of the Bank of Russia kept the key rate at 7.5% per annum. Previously, experts considered the possibility of raising the key rate.

The regulator’s release explains: “The current inflation rate has increased since the end of 2022 but remains moderate, including sustainable components. Inflationary expectations of the population decreased. At the same time, they stay at an elevated level, as are the price expectations of enterprises. Economic activity is growing faster than expected in the February forecast of the Bank of Russia. This reflects increased domestic demand and the ongoing adaptation processes to the Russian economy. Accelerated execution of budget expenditures, worsening terms of foreign trade, and the state of the labor market continue to form inflationary risks. In general, the balance of risks to inflation has not changed significantly since the previous meeting.

In the context of a gradual increase in current inflationary pressure, we will evaluate the feasibility of raising the key rate to stabilize inflation near 4% in 2024 and beyond at the next meetings.”

The inflation forecast by the end of 2023 has decreased - 4.5-6.5% instead of the previous 5-7%.