The Bank of Russia increased the key rate to 16% per year

This is the fifth consecutive increase in the key rate.

The Central Bank points out that current inflationary pressure remains high. By the end of 2023, annual inflation is expected to be between 7% and 7.5%, which corresponds to the upper limit of the expected range. At the same time, GDP growth in 2023, according to the mega regulator, will be higher than the October forecast and will exceed 3%.

The Bank of Russia admits that the upward deviation of the Russian economy from the balanced growth trajectory in the second half of 2023 turned out to be more widespread than estimated in October. Overall credit growth rates remain high.

“The return of inflation to the target in 2024 and its further stabilization around 4% implies a long period of maintaining strict monetary conditions in the economy,” the report says.

• At a meeting on October 27, the Central Bank of the Russian Federation raised the key interest rate by 200 basis points. — from 13 to 15% annually. The regulator explained the decision by the increase in inflationary pressure: “it developed above the expectations of the Bank of Russia.”
• RSHB Asset Management analyst Pavel Paevsky also previously predicted an increase in the key interest rate of at least 100 basis points, up to 16% annually. It was noted that the key rate of 15% per year is 2.1% higher than current inflation, but this is not enough to return inflation to 4% in the short term.
• Earlier, RBC reported, citing two federal officials, that the Ministry of Economic Development had begun work on a mechanism to hedge interest rate risks for companies against the background of an increase in the key rate of the Bank of Russia.

The next meeting of the Central Bank, at which the issue of the level of the key rate will be considered, will take place on February 16, 2024.