Bank Of Russia Raises Key Rate Once Again By 2 Pp To 15% Per Annum
Date
10/27/2023 3:12:03 PM
(MENAFN- AzerNews) The bank of Russia raised the key rate by 2 percentage points
(pp) to 15% per annum, indicating a significant increase in current
inflation pressure, the regulator said in a press release on
Friday, Azernews reports, citing TASS.
"On 27 October 2023, the Bank of Russia Board of Directors
decided to increase the key rate by 200 basis points to 15.00% per
annum. Current inflationary pressures have significantly increased
to a level above the Bank of Russia's expectations. Steadily rising
domestic demand is increasingly exceeding the capabilities to
expand the production of goods and the provision of services.
Inflation expectations remain elevated," the regulator said.
The regulator also raised its inflation forecast for 2023 to
7-7.5% from 6-7% and adjusted it for 2024, expecting inflation in
the range of 4-4.5%. "In its further key rate decision-making, the
Bank of Russia will take into account actual and expected inflation
dynamics relative to the target and economic developments over the
forecast horizon, as well as the risks posed by domestic and
external conditions and the reaction of financial markets.
According to the updated forecast of the Bank of Russia, annual
inflation will range from 7.0 to 7.5% in 2023. Given the current
monetary policy stance, annual inflation will decline to 4.0-4.5%
in 2024 and stay close to 4% further on," the statement said.
The Bank of Russia changed the forecast for the average key rate
for 2023-2026 - by the end of 2023, the regulator expects it to be
reach the level of 15.0-15.2%.
In addition, the Bank of Russia
raised its forecast for the average key rate for 2023 to 9.9% from
9.6-9.7%. For 2024, the forecast was also adjusted to 12.5-14.5%
from 11.5-12.5%. In 2025, the regulator expects the average key
rate to reach 7-9% (previously 7-8%), in 2026 - 6-7% (previously
5.5-6.5%).
The regulator believes it is necessary to ensure additional
tightening of monetary policy to limit the scale of inflation
deviation upward from the target. "The updated medium-term
parameters of fiscal policy assume a slower than expected decline
in fiscal stimulus in the years ahead. Therefore, it is required to
additionally tighten monetary policy to limit the upward deviation
of inflation from target and return it to 4% in 2024. The return of
inflation to target and its further stabilization close to 4% also
means that tight monetary conditions will be maintained in the
economy for a long period," the regulator said.
The inflation forecast for 2023 was raised to 7-7.5% from 6-7%.
In 2024, the figure is expected to be in the range of 4-4.5% and
will remain close to 4% in the future.
The regulator also raised its forecast for the price of Brent
oil for 2023-2026. Thus, the forecast for 2023 was raised to $83
from $60 per barrel, for 2024 - to $80 from $60 per barrel, for
2025 - to $75 from $55 per barrel, for 2026 - to $70 from $55 per
barrel.
The Bank of Russia Board of Directors will hold its next key
rate review meeting on December 15, 2023.
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