Reuters: inflation in Russia at the end of 2023 will be 5.8%

The Central Bank of Russia will have limited room to cut interest rates in 2023 as inflation remains above the target. Analysts interviewed by Reuters came to this conclusion. According to their forecast, inflation will be 5.8% by the end of 2023.

After initially gloomy forecasts of a double-digit decline in GDP, analysts and officials gradually improved their forecasts, the agency writes, as the Russian economy shows stronger-than-expected resilience.

At the end of December, Reuters experts predicted that the Russian economy would shrink by 2.8% this year, which is close to expected Ministry of Economy of the Russian Federation to fall by 2.9%. An agency poll in early December predicted a 3.0% contraction. Analysts expect a 1.9% contraction next year.

Inflation could remain above the central bank’s 4% target in 2023, ending the year at 5.8%, but below the 12.2% growth expected this year, according to Reuters.

“Despite the weakness of the ruble, we keep our forecast for 2023 at the level of 5.5–6.0%, at which the Central Bank rate may be slightly reduced or at least not increased,” said Dmitry Field. The dollar exchange rate by the end of next year will be 72.5 rubles/$.

The last time the Central Bank of the Russian Federation lowered the key rate on September 16, to 7.5%. Head of the Bank of Russia Elvira Nabiullina December 16 statedthat annual inflation may slow down in the coming months. According to her forecast, in the spring the figure may drop below 4%. According to the Central Bank, by December 12, inflation in Russia rose to 12.7% in annual terms. According to the regulator’s forecasts, in 2023 annual inflation will be at the level of 5-7%.

Daria Erozbek