The Bank of Russia increased the key rate to 21% per year

This is the third consecutive rate increase. The Central Bank also increased the interest rate in September, from 18 to 19% annually, and in July, from 16 to 18%.

The regulator’s message notes that inflation is significantly higher than the July forecast (6.5%–7% – editor’s note), and inflation expectations continue to rise.

“Further tightening of monetary policy is required to ensure that inflation returns to target and reduce inflation expectations. “The Bank of Russia admits the possibility of raising the key interest rate at the next meeting,” the Central Bank said in a statement.

In September, current seasonally adjusted price growth reached 9.8% annualized, up from 7.5% in August. Core inflation rose to 9.1% from 7.7% in August. Annual inflation, estimated as of October 21, was 8.4% and by the end of this year it is expected to be in the range 8–8.5%.

The Central Bank also indicated that the labor market “remains tough.” Unemployment remains at record lows and labor shortages are increasing across a wide range of industries, the regulator says. Wage growth is outpacing labor productivity growth.

Analysts surveyed by RB.RU a week before the Central Bank’s decision predicted an increase in the rate from 19% to more than 20%. Economists admitted that the regulator could decide to increase the rate to 22% before the end of the year because inflation is growing above the Central Bank’s expectations.

At the end of August, the Central Bank announced that it would allow the rate to rise to 22% in 2025. The regulator assumed that inflation would rise to 15% due to a significant reduction in the supply of goods and services.

The next meeting of the Board of Directors of the Central Bank on the key interest rate is scheduled for December 20.