The Central Bank of Russia made another interest rate increase after the emergency increase last month, as the pressure on the ruble continued.
The Central Bank of Russia increased the policy rate from 12 percent to 13 percent at its ordinary meeting.
Although the majority of economists participating in the Bloomberg survey did not foresee such an increase, a 100 basis point interest rate increase was priced in the money markets.
The Central Bank of Russia said in a statement: “The need for further interest rate increases will be evaluated in the coming meetings.”
The bank said that “Serious inflationary risks have solidified. Domestic demand growth exceeds production capacity and the depreciation of the ruble in the summer increases inflationary risks.”
“Tight Monetary Policy Conditions Will Continue”
In the statement it made along with the interest rate decision, the Russian Central Bank said, “Inflationary pressures continue to be very high in the Russian economy. Tight monetary policy conditions will be maintained for a long time.”
According to the updated forecast of the Central Bank of Russia, annual inflation will remain at 6.0-7.0 percent in 2023. Considering the monetary policy followed, it is predicted that annual inflation will return to 4 percent in 2024 and will remain close to these levels thereafter.
In its base scenario, CBR expects the GDP growth rate to be 1.5-2.5 percent in 2023, 0.5-1.5 percent in 2024, 1.0-2.0 percent in 2025 and 1.5 percent in 2026. He predicts it will be 2.5.