Central Bank presented economic evolution forecast for the next three years

The main objective of monetary policy in the report is to keep inflation close to 4%.

The Central Bank forecasts that, taking into account the structural restructuring of the economy, reaching this indicator will take more than a year and a half and will end in 2024. To achieve this, the Bank of Russia will adjust the key rate.

Base scenario mean values ​​of key economic indicators:

• The key rate in 2023 is expected to be 6.5-8.5%, in 2024 – 6-7%, by 2025 – 5-6%;
• The GDP in 2022 will show a negative value (from -6% to -8%), as in 2023 – (from -4% to -6%); in 2024, the indicator will return to positive 1.5-2.5%; the same level is expected for 2025;
• Inflation in 2022 is projected at 12-15%, in 2023 – 5-7%, in 2024 and 2025 – 4%;

Except “Basic Scenario” Central Bank report contains scenario “Global Crisis”, which assumes further fragmentation of the global market and outlines several risks. In particular, it is about persistently high inflation in the world and, as a result, a recession; and new sanctions against Russia. The combination of these risks could trigger a global crisis comparable to the crisis of 2007-2008.

In the worst case, annual inflation in 2023 will reach 13-16%, and only a small GDP growth will be possible in 2025 (around 1%). Therefore, the Central Bank will significantly increase the key rate (with respect to the base scenario) and will maintain it at this level.

The report also paints a positive scenario: “Accelerated Adaptation”. It implies a faster adaptation of the Russian economy to new conditions. According to him, in 2024-2025, annual inflation will remain close to 4% with a key rate of 5-6% per year.