Russia’s central bank maintained its key interest rate at 7.5% for a second consecutive meeting on Friday, December 16, but indicated that inflation risks are rising.
The Bank of Russia has cut interest rates 6 times so far this year and the key rate remained stable at 7.5% in October, after cutting 50 basis points in September, down from 8% previously.
The Bank of Russia last raised interest rates in late February, after the Russo-Ukrainian war, then raising the main interest rate from 9.5% to 20%.
In its statement released today, the Central Bank of Russia said that the external environment of the national economy remains “tough” and significantly constrains economic activity.
He added that consumer prices are currently growing at a moderate pace, while consumer demand is sluggish.
It underlines the stability of inflation expectations for households and businesses, broadly unchanged, at a high level, amid growing inflationary pressures especially from the labor market and the deterioration in external trade conditions.
Russia’s annual inflation is forecast at 12.7% in December, according to the Bank of Russia, well above its 4% target.
The bank’s projections now point to annual inflation falling to between 5% and 7% in 2023, before returning to its target in 2024.
