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Russia: The central bank for a new interest rate increase of up to 100 basis points

Russia’s central bank will consider raising the key interest rate to 100 basis points at its next meeting on December 17, Governor Elvira Nabiullina said, as inflation approaches forecasts.

The Bank of Russia has raised the key interest rate six times this year, from a record low of 4.25%, as inflation is at a five-year high of more than 8%.

Nabiullina said the central bank, which raised the key interest rate by 50 basis points to 7.5% at its last meeting in October, had hinted that the key interest rate could rise by 0-100 basis points by the end of the year. of the year.

“We will look at this decision within the range. But we must say that inflation estimates are now close to the upper limit of our forecast. We will take this into account,” Nabiullina told reporters.

The central bank expects inflation, for which the target is 4%, to reach 7.4% -7.9% in 2021. Inflation on November 22 stood at 8.05%.

Nabiullina also said that the recent volatility in the ruble, which has lost 8% of its value against the dollar in the last four weeks, was not the reason for the suspension of daily foreign exchange markets for state coffers.

Analysts did not rule out the possibility that the central bank may consider suspending foreign exchange markets to ease pressure on the ruble, the weakening of which threatens to stimulate inflation even higher.

The Russians are afraid of rising prices and Russia plans to keep its key interest rate above 6% until about mid-2023, to further reduce inflation, the central bank said.

The central banker stressed that keeping interest rates unchanged at the next meeting is the least likely scenario, while adding earlier that it was premature to talk about lowering the inflation target in the future.

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Source From: Capital

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