The Board of Directors of the Bank of Russia on Friday, December 17, decided to raise the key rate by 1 percentage point to 8.5 percent. This is stated in press release on the regulator’s website.
This is the seventh consecutive increase since March in the main parameter of monetary policy. The reason for this was the strengthening of inflation and inflationary expectations.
Experts ruled out the possibility of maintaining or reducing the rate. The head of the Central Bank Elvira Nabiullina commented on the upcoming meeting in the same way in December.
In November, according to Rosstat, the rise in prices in Russia reached 8.4 percent in annual terms. This is the highest since January 2016. Following the results of the last meeting, the Central Bank raised the inflation forecast to 7.4-7.9 percent per year, but the regulator does not exclude that it will not be possible to achieve it either. As of December 13, annual inflation rose to 8.1 percent.
The next meeting of the Board of Directors of the Central Bank is scheduled for February 11, 2022. The regulator assumes that the increase in the key rate will continue.
Nevertheless, the regulator continues to believe that the monetary policy pursued by it will reduce inflation to 4.0-4.5 percent by the end of 2022, so that later it would be about 4 percent.
Among inflationary risks, the Central Bank singles out persisting difficulties in production and supply chains, a shortage of labor resources, structural changes in the labor market due to the pandemic, as well as the movement of world markets. Separately, geopolitical events that can cause increased volatility are highlighted as short-term risks.
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