Aksakov: The Central Bank may return to lowering the key rate in 2024

It is necessary to return to the issue of lowering the key rate as soon as possible, said Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, Chairman of the Council of the Association of Russian Banks (ARB). According to him, the Central Bank will return to this issue next year.

“The decision of the Board of Directors of the Bank of Russia to increase the key rate from 13% to 15% per annum gives the market a negative signal in terms of lending activity. Perhaps, by doing so, the regulator would like to consolidate the stabilization of the situation in the foreign exchange market, as well as strengthen the containment of inflationary pressure,” said Aksakov (quote according to TASS).

He also hopes that in the future the regulator will not have to take new actions to tighten monetary policy. According to his estimates, the Bank of Russia will be able to return to the issue of consistently reducing the key rate in 2024.

“We are observing both positive and negative trends – the continued rise in inflation in many regions, the revival of industrial production, an increase in corporate lending and a reduction in consumer lending. In this situation, another rate increase can be explained. Now we need to wait for the delayed effect and, taking into account the results, build further policy,” he noted.

Chief Economist for Russia and CIS Bloomberg Economics Alexander Isakov before the decision of the Central Bank Council told Vedomosti reports that the Bank of Russia will have to raise the rate, since maintaining high inflation rates for a long time threatens to reduce confidence in the regulator.

The Central Bank also updated its forecast for annual inflation. Now the regulator expects inflation to be in the range of 7-7.5% (last year it was 6-7%) for this year. In 2024 it will drop to 4-4.5% and will be close to 4% in the future. Weekly inflation in Russia from October 17 to 23 accelerated to 0.24% from 0.15%, in annual terms – to 6.59% from 6.38%, reported in Rosstat and the Ministry of Energy.