Bank of Russia raises key rate at last meeting in 2023

The board of directors of the Bank of Russia raised its key rate from 15% to 16% per annum at this year’s last meeting, noting that the return of inflation to target in 2024 assume that tight monetary conditions will be maintained in the economy for a long period.

"On 15 December 2023, the Bank of Russia Board of Directors decided to increase the key rate by 100 basis points to 16.00% per annum. Current inflationary pressures remain high. Households’ and businesses’ inflation expectations have increased," the regulator said in a statement.

Russia’s GDP growth will exceed 3% by the end of this year, the Central Bank said, adding that economic activity is increasing much faster than it expected in October.

The Bank of Russia also maintained its inflation forecast for 2023 at 7-7.5%, expecting it close to the upper bound of the range.

According to the forecast of the Bank of Russia, given the monetary policy stance, annual inflation will decline to 4.0-4.5% in 2024 and stay close to 4% further on.