The decision was in line with the expectations of the majority of analysts, according to a poll by the Novosti Agency, as experts expected the Russian Central Bank to raise the main interest rate by 200 basis points from 16% to 18% annually.
The Russian Central Bank attributed its decision to raise interest rates to countering inflationary pressures, and said in a statement following a meeting of its board of directors: “In order for inflation to start falling again, there is a need to tighten monetary policy and bring inflation back to the target.”
The new interest rate level (18% per annum) is the highest since the beginning of April 2022, and the regulator raised its inflation forecast for the current year 2024 to 6.5% – 7% from 4.3% – 4.8% it had previously expected, and also raised its forecast for price growth next year to 4% – 4.5% from 4%.
But the Bank of Russia (the Russian central bank) kept its inflation forecast for 2026 unchanged at 4%, and inflation is expected to be at the same level in 2027.
Regarding economic performance, the Central Bank raised its expectations for the country’s GDP growth in 2024 to 3.5%-4% from 2.5%-3.5%.
It lowered its estimates for Russian economic growth in 2025 and 2026 to 0.5% – 1.5% (2025) and to 1% – 2% (2026).
In 2027, the Central Bank expects Russia’s GDP to grow by 1.5-2.5%.
Since last July, the Russian Central Bank has started raising the main interest rate to curb inflation. The interest rate was raised in July by only one percentage point (1%), but a month later the Central Bank raised the interest rate sharply by 3.5% in an emergency meeting in light of the decline in the ruble exchange rate.
Last fall, the central bank raised interest rates by 3 percentage points, and in December 2023, it raised them by 1% to 16%.
Source: RT + Novosti
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2024-07-26 23:09:37
