The central bank of Russia announced on Friday that it raised its monetary policy rate by 50 basis points to 5.5% after the June meeting. The ruble appreciated in the market after the decision, leading USD / RUB to prolong the current bearish run to 71.55, the lowest level since July last year.
The Central Bank of Russia He affirmed that considering the high inflation expectations, the balance of risks has shifted significantly towards pro-inflationary ones. Decisions will be made taking into consideration the “dynamics of real and expected inflation in relation to the objective and economic evolution during the forecast horizon, as well as the risks posed by internal and external conditions and the reaction of financial markets” .
The monetary authority indicated that considering the current monetary policy stance, annual inflation will return to the bank’s target in the second half of 2022 and will remain close to 4% later on.
Regarding the future, the bank indicated that the economic recovery may add more inflationary pressures, which generates the need for new increases in the next meetings.
Analysts at Capital Economics say the statement was more “hawkish” in referring to inflationary risks and the need to raise rates. “With inflation set to remain firm above target for a while, another 50-70bp hike in interest rates for the second half of the year looks increasingly likely,” analysts said.