Russia’s Central Bank has kept its key rate at 7.5% per annum for the fourth time running, noting the rate increase possibility should pro-inflation risks intensify, according to a statement released by the regulator.
"The Bank of Russia Board of Directors decided to keep the key rate at 7.50% per annum. Current rates of price growth remain moderate, including in the stable components of inflation. Inflation expectations of households are down significantly but remain elevated, as do businesses’ price expectations. High-frequency data suggest that a recovery in business and consumer activity is ongoing," the statement reads.
Accelerating fiscal spending, deteriorating terms of foreign trade and the situation in the labor market continue to pose pro-inflation risks, the regulator said.
The Central Bank forecasts that annual inflation will temporarily fall below 4% in the coming months under the influence of last year’s high base effect. "According to the baseline scenario, given the monetary policy stance, annual inflation will come in at 5-7% in 2023, return to 4% in 2024 and will be close to 4% further on," the press release reads.