The Central Bank of Russia has kept the key rate at 7.5 percent per annum
Following the meeting, the Board of Directors of the Bank of Russia decided to keep the key interest rate at the level of 7.5 percent per annum. message on the regulator’s website. The key parameter of monetary policy has not changed since last September.
This decision coincided with the expectations of analysts, who noted the absence of fundamental changes since the last meeting on the main parameters affecting the economy. At the same time, some experts still did not rule out an increase in the rate to 7.75 percent.
The regulator’s assessment confirms the validity of such assumptions. The report states that the balance of risks of price changes has shifted towards pro-inflationary ones. This is caused by the acceleration of budget expenditures, the deterioration of the terms of foreign trade and the state of the labor market.
Inflationary expectations of the population and price expectations of enterprises also remain at an elevated level. Economic activity is growing faster than expected in April, reflecting a strong recovery in domestic demand.
As of June 5, prices rose by 2.6 percent in annual terms. The indicator moved to growth with the price dynamics observed in the period from May to October 2022. In the baseline scenario, taking into account the ongoing monetary policy, annual inflation in 2023 will lie in the range of 4.5-6.5 percent. The Central Bank allows an increase in the key rate at the next meetings in order to stabilize inflation at the target level of 4 percent in 2024.
On the issue of economic activity, the regulator reiterated the growing labor shortage that is observed in many industries. As a result, productivity growth may lag behind real wage growth, leading to lower investment. Against this background, the Central Bank stated, the importance of public investment is growing, which is making an increasing contribution to increasing domestic demand.
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