During its meeting on Friday, the Russian central bank made the decision to keep its key interest rate steady at 16.00 percent, a move that was widely anticipated. This occurred as policymakers observed that, despite a gradual easing, inflation remains high.
The central bank board, led by Governor Elvira Nabiullina, concluded that it's too soon to predict future disinflationary trends. The bank released a statement that emphasized the need to maintain tight monetary conditions in the economy for a long period, projecting the return of inflation to the target in 2024 and foreseeing its stabilization around 4%.
The bank noted that the monetary conditions began to tighten following the rate hike in the second half of 2023. According to the most recent preliminary official data, although consumer price inflation showed signs of deceleration in March, the annual inflation maintains its February rate of 7.7 percent.
The bank anticipates inflation to decrease to 4.0-4.5 percent in 2024 and eventually stabilize around 4 percent. In the first quarter of 2024, the Russian economy is predicted to witness rapid growth, spurred by robust consumer activity and an increase in investment demand. However, the bank also warned that, over the medium term, inflation risks continue to lean towards the upside.
