The Central Bank kept the key rate at 7.5%

The Bank of Russia left the key rate at 7.5% following the scheduled meeting of the Board of Directors. The Central Bank kept the rate at this level for the fourth time. The key rate was cut for the last time in September 2022.

The regulator noted that inflation expectations of the population remain at an elevated level, despite a significant decrease in the indicator. The price expectations of enterprises also remain at a high level. “Live data points to a continued recovery in business and consumer activity. Accelerated execution of budget expenditures, worsening terms of foreign trade and the state of the labor market continue to form pro-inflationary risks,” the statement said. press release Central Bank.

According to the Central Bank, in February, the annual growth rate of consumer prices fell by 0.8% to 11%. On average, since the beginning of the year, the average price growth rate is about 4% in annual terms and is above the average values ​​of the fourth quarter of 2022. The weakening of the ruble has so far had little effect on price dynamics, the Central Bank noted. The regulator improved its estimate of the fall in GDP in 2022 to 2.1% against the February estimate of 2.5%. According to live data for the first quarter of 2023, economic activity is still recovering.

According to the regulator’s forecast, annual inflation will temporarily fall below 4% in the coming months due to the high base effect of 2022. In the baseline scenario, inflation in Russia by the end of 2023 will be from 5% to 7%, in 2024 – 4%.

The Central Bank noted that significant pro-inflationary risks are associated with the impact of geopolitical tensions on foreign trade. The regulator expects that demand for Russian exports may decline due to increased external trade and financial restrictions, which will lead to an additional depreciation of the ruble. Complications in production and logistics chains or financial settlements due to external restrictions may lead to a rise in the price of Russian imports.

The Bank of Russia added that pro-inflationary risks from the labor market remain. Labor shortages in certain sectors threaten to lag productivity growth behind real wage growth. The Central Bank added that the population’s propensity to save also remains.

By estimated Ministry of Economy, by March 13, inflation fell to 7.65% from 9.43% in annual terms. According to Rosstat, in the week from March 7 to March 13, inflation accelerated to 0.02%, consumer prices rose by 1.32% since the beginning of the year. Inflation expectations of Russians in March decreased to 10.7% from 12.2% in February, inFOM reported, citing its research for the Bank of Russia. The indicator returned to the lowest values ​​since February 2021 (12.3%).

The next meeting of the Board of Directors of the Central Bank on the key rate will be held on April 28.

Read more about inflation expectations – in the material “Kommersant” “Everything passes, even inflation”.

Olesya Pavlenko