The Board of Directors of the Bank of Russia at a meeting on December 15 decided to increase the key rate by 100 basis points, to 16% per annum, according to the regulator’s message, Report informs referring to Interfax.
“Current inflation pressure remains high. At the end of 2023, annual inflation is expected to be near the upper limit of the forecast range of 7–7.5%. At the same time, GDP growth in 2023, according to the Bank of Russia, will be higher than the October forecast and will exceed 3%. This means that the upward deviation of the Russian economy from the balanced growth trajectory in the second half of 2023 turned out to be more significant than the Bank of Russia estimated in October,” reads the report.
The Central Bank of the Russian Federation is recording signs of a slowdown in activity in certain segments of the credit market, but overall lending growth rates still remain high. “Inflation expectations of the population and price expectations of enterprises have increased. The return of inflation to the target in 2024 and its further stabilization around 4% implies a long period of maintaining tight monetary conditions in the economy,” the regulator notes.
