Nabiullina: the key rate should have been raised in spring

“Inflationary pressures began to increase in the second half of the year. And now the price growth rate is actually quite high, much higher than our inflation target. And yes, looking back, we understand that monetary policy was soft and that it was necessary to raise the rate earlier,” said the head of the Central Bank in an interview with RBC.

Asked when the Bank of Russia should have started raising the key interest rate, Nabiullina replied: “For example, in the spring.”

This year, the Bank of Russia carried out five rounds of key interest rate increases. In July, the regulator increased the key rate for the first time since September 2022, from 7.5% to 8.5% annually.

In August, the Central Bank decided to immediately increase the key rate by 350 basis points, up to 12% annually. The most recent increase in the key rate came on December 15, when the regulator increased the rate by 100 bps. — 15 to 16% annually.

According to Rosstat, in November inflation in Russia amounted to 7.5%, which coincides with the upper limit of the Central Bank’s forecast and the forecast of the Ministry of Economic Development for 2023.

Nabiullina noted that the Bank of Russia will ease monetary policy when it is convinced “that inflation is steadily decreasing.”

“Not only the general rate of price growth, but above all those indicators that characterize the stability of inflation. This is core inflation, for example, the growth rate of prices without taking into account volatile elements. The growth rate of prices for goods and services is less dependent on the ruble exchange rate,” said the head of the Central Bank.