According to the statement made by CBR, policymakers increased the base interest rate from 16.00% to 18.00%. Analysts expected a 200 basis point increase in interest.
“Growth in domestic demand still exceeds the capacity to expand the supply of goods and services. Monetary policy needs to be tightened further for inflation to start falling again. Returning inflation to target requires significantly tighter monetary conditions than previously anticipated,” the statement said.
The Central Bank of Russia will discuss the need for further increases in the key interest rate at its upcoming meetings.
The Bank’s forecast was significantly revised, including the 2024 inflation forecast, which was raised to 6.5-7.0 percent.
“Given the monetary policy stance, annual inflation will fall to 4.0-4.5 percent in 2025 and remain close to 4 percent thereafter,” the statement said.
The Central Bank of Russia assumed that the announced path of normalization of fiscal policy in 2024 and beyond will remain unchanged. It was noted that changes in this path may require revision of monetary policy parameters.
Source: www.dunya.com
