In the statement made by the Central Bank of Russia, it was stated that household inflation expectations in the country were at high levels.
Pointing out that economic activities recovered above expectations, the statement said, “The Central Bank of Russia has decided to leave the policy rate at 7.5 percent without making any changes.”
Market expectations were that the Central Bank of Russia would keep the policy rate unchanged.
In the statement, it was pointed out that the situation in the employment market, increased budget expenditures and worsening foreign trade conditions increased the pro-inflationary risks, while the year-end inflation rate was expected to be 4.5 to 6.5 percent.
After the Central Bank of Russia increased the policy interest rate from 9.5 percent to 20 percent in February 2022 due to the sanctions of the western countries, it entered the interest rate cut process and reduced the interest rate to 7.5 percent at the meeting held in September 2022.
Nabiullina: Russian economy will return to pre-crisis levels next year
Making a statement to the journalists about the decision of the Central Bank of Russia to keep the policy rate constant, Central Bank President Elvira Nabiullina noted that the global economy started to return to the pre-Kovid-19 epidemic with the increase in demand in the service sector and the decrease in the demand for goods, and said, “The Russian economy will completely return to the pre-crisis period next year.” .
Pointing out that the worst phase of the world banking crisis is probably over, Nabiullina said, “However, risks for the global economy remain. The expectation of limited growth rates in the largest economies also affects commodity prices. “We’ve seen a drop in natural gas, coal, metal and fertilizer prices recently,” he said.
The Chairman of the Central Bank of Russia stated that the risks to inflation in the Russian economy have increased,
“Due to the personnel shortage, production may not meet the demand and may cause inflation to accelerate above the 4 percent target. The risks of further tightening of sanctions are increasing, especially in terms of secondary sanctions. The danger of a slowdown in the global economy continues,” he said.
Nabiullina said that the probability of a rate hike in the next meeting of the Central Bank of Russia is rising.