At a meeting on July 26, the Bank of Russia decided to raise the key interest rate by 200 basis points to 18% per annum. The Central Bank noted an acceleration of inflation and significantly revised its forecast.
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The Bank of Russia raised the key rate to 18% per annum
“Inflation has accelerated and is significantly higher than the Bank of Russia’s April forecast. Domestic demand growth continues to significantly outstrip the possibilities of expanding the supply of goods and services,” the regulator said in a statement.
To stabilise the situation, the Central Bank considers it appropriate to tighten monetary policy. The regulator also announced a significant revision of the inflation forecast for 2024.
Thus, provided the current policy of the Central Bank is maintained, annual inflation will be 6.5% to 7.0%. The figure will not return to the 4% level until 2025, the Central Bank expects.
The previous meeting on the key rate took place on June 7, when the Central Bank’s monetary policy was not tightened.
Earlier, analysts polled by RB.RU predicted a rate increase to 18% and suggested when the Central Bank would lower it again. Among other things, experts discussed the impact of a tight monetary policy on small businesses and measures to maintain sustainability during this period.
Author:
Natalia Gormaleva
Source: RB
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