Why the Central Bank raised the rate above market expectations
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The Board of Directors of the Bank of Russia on Friday raised the key rate by 1 percentage point at once to 8.5%. The market was waiting for a softer decision – the consensus forecast of analysts polled by Vedomosti suggested a rate hike of 0.5 percentage points.
Members of the Board of Directors of the Central Bank considered “subjectively” options for raising the rate by 75 and 100 bp. etc., but there were also more radical proposals, said Elvira Nabiullina, chairman of the Bank of Russia, during a press conference following the meeting on July 21. “Taking into account the analysis of the situation, the assessment of all risk balances, the regulator decided that the rate increase by 100 bp. etc. will be more optimal,” she noted.
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