Russian Central Bank: Rising demand could create overheating

In the written statement made by the Research and Forecasting Department of the Central Bank of Russia, evaluations regarding the country’s economy were included.

In the statement, it was stated that the growth trend in the Russian economy continues, and the increasing demand of the state and citizens was pointed out as the main factors of the said trend.

“This situation is evident in record low unemployment, record high capacity utilization in many sectors of the economy and strong growth in corporate loans,” the statement said.

Interest rates may rise

While warning that the dynamics of domestic supply of goods and services lag behind the dynamics of domestic demand, the statement said, “If the deficit with imports is not closed, the economy will enter a period of overheating, where prices will respond more to increasing demand rather than production.”

Pointing out that the inflation pressure on prices is expected to increase in the coming period, the Central Bank of Russia may increase the interest rate in order to reduce the inflation in the country to the target level.

Estimating that the year-end inflation rate will be between 4.5 and 6.5 percent, the Central Bank of Russia aims to reduce the said rate to 4 percent by the end of 2024.