The Central Bank of Russia kept the key rate at 7.5 percent per annum
Following the meeting of the Board of Directors of the Bank of Russia, it was decided to keep the key rate at the level of 7.5 percent per annum. message on the regulator’s website. The key parameter of monetary policy has remained unchanged since last September.
This decision coincided with the expectations of most analysts, who, on the one hand, noted the preservation of pro-inflationary rates and the weakening of the exchange rate, and on the other hand, suppressed demand, which is holding back prices.
The press release of the Central Bank notes that economic activity is growing faster than expected, which reflects the ongoing processes of adaptation in the Russian economy. However, budget spending continues to rise, and the terms of trade are deteriorating. Together with the state of the labor market, we can talk about the risks of rising prices.
The regulator improved the inflation forecast for the year to 4.5-6.5 percent (previously 5-7 percent) with a decrease to 4 percent in 2023, but is still ready to assess the feasibility of raising the key rate at the next meetings. The forecast for economic growth has also been changed – 0.5-2 percent in 2023 and 0.5-2.5 percent in 2024.
Last week, analysts from the Research and Forecasting Department of the Bank of Russia (the opinion does not necessarily coincide with the official position of the regulator) in the April bulletin “What the Trends Say” indicated that the situation is characterized by a high level of uncertainty. On the one hand, continued economic growth requires easing monetary policy, but pro-inflationary factors are increasing and even with the current level of the rate, the situation may get out of control. One of the problems they called the situation in the labor market. The record low unemployment rate is leading to unjustified wage increases, hindering growth.
The next meeting of the Board of Directors on the key rate is scheduled for June 9, 2023.
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