Central Bank expects inflation of 5.0-6.5% for the year – Kommersant

The Central Bank expects annual inflation of 5% by October and 5.0-6.5% by the end of the year amid the weakening of the ruble, according to report regulator on monetary policy. Annual inflation, as predicted by the Central Bank, will return to the target of 4% in 2024 and will be close to 4% in the future.

According to the report, the main factor influencing the rate of inflation is “substantially faster” growth in domestic demand. Another factor is the pass-through effect of the depreciation of the ruble. “The ruble depreciation pass-through to prices in the first half of the year was moderate. In the second half of the year, it will manifest itself to a greater extent,” the report says.

According to the updated forecast of the Central Bank, the annual average key rate for 2023 was increased to 7.9-8.3%, for 2024 – to 8.5-9.5% per annum. “In the future, as inflation stabilizes on target and inflation expectations decrease, the key rate will gradually return to its long-term neutral range of 5.5–6.5%,” the regulator said.

the Central Bank also predictsthat the GDP growth rate will be 1.5–2.5% in 2023, 0.5–2.5% in 2024, 1.0–2.0% in 2025 and 1.5–2.5% in 2026.

In July, the Central Bank began to tighten monetary policy by raising the key rate from 7.5% to 8.5%. This decision is explained by the regulator by the acceleration of inflation and the strengthening of inflationary expectations in the country. According to Rosstat, in the week from July 18 to July 24, prices rose by 0.23%, showing another acceleration relative to previous periods. The annual estimate exceeded the threshold of 4% and reached 4.2%. Rosbank experts do not rule out that the regulator will raise the rate to 9% at the September meeting.

More details – in the material “All bets in the fight against inflation”.