The Central Bank allowed the increase in the key rate

The key rate may be raised at the upcoming meeting of the Board of Directors of the Bank of Russia. This was stated by Deputy Chairman of the Central Bank of the Russian Federation Alexei Zabotkin.

“The 7.5% rate over the period was in line with our understanding, including our forecast, of what is required to stabilize inflation near 4% on our targets. So far the data has confirmed this. But we see that the balance of risks is increasingly skewed towards pro-inflationary,” he said (quote according to RIA Novosti).

Zabotkin recalled that the rate has remained unchanged since September 2022. He called such a period significant and admitted that the key rate could be increased at the upcoming meeting of the Board of Directors of the Bank of Russia. According to him, an expansion of domestic demand is recorded both from the private sector and from the public sector, as well as the acceleration of lending in recent months.

The Board of Directors of the Central Bank at a meeting on June 9 for the sixth time in a row since September 2022 left key rate at 7.5% per annum. At the same time, as Vedomosti wrote, the regulator’s hawkish signal has become tougher: the Central Bank “allows” the rate increase at the next meetings. According to the regulator’s forecast, in the second quarter inflation will be at the level of 3.6%, and by the end of the year it may reach 4.5-6.5%. In 2024, inflation will reach a plateau.

On the sidelines of the St. Petersburg International Economic Forum (SPIEF) Chairman of the Central Bank Elvira Nabiullina statedthat the weakening of the ruble will be carried over into prices. The Bank of Russia will monitor the situation and take this into account when making further decisions on the key rate, she added.