The Central Bank of Russia has decided to maintain its key interest rate, keeping it steady at 16.00 percent, as announced last Friday. This decision follows a series of five successive rate hikes.
Under the leadership of Elvira Nabiullina, the Bank of Russia's board of directors made this decision. Since July of last year, the policy rate has seen an increase by a substantial 850 basis points.
Currently, the Central Bank acknowledges that, while inflationary pressures have diminished compared to the fall season, they remain significantly high. The Central Bank believes that their monetary policy will further reinforce the disinflation process in their national economy.
By 2024, they project inflation to reduce to 4.0-4.5 percent, and stabilize around 4 percent thereafter. Moreover, they note that medium-term inflation risks are still leaning towards the higher side.
Liam Peach, an economist at Capital Economics, speculated that the bank's announcement implied the conclusion of the tightening cycle, despite not explicitly providing this forward guidance. Peach added that he expects the interest rate to hold steady at 16.00 percent until the last quarter of the year, when the bank could potentially initiate an easing cycle.
