The Bank of Russia raised the key rate to 16% per annum

The Russian Central Bank raised the key rate by 100 basis points to 16% per annum. The press service of the Central Bank announced on Friday, December 15 that the current inflationary pressure remains high. By the end of 2023, annual inflation is expected to be between 7 and 7.5 percent. And GDP growth in 2023, according to the Bank of Russia, will be higher than the October forecast and will exceed 3%.

As RBC reports, Moscow warned that “further decisions on the key rate will be made taking into account the actual and expected dynamics of inflation, economic development, internal and external risks.

According to the forecast of the Bank of Russia, annual inflation in 2024 will decrease to four percent and will be close to this indicator in the future, the press service of the Central Bank reported

Over the past six months, the Bank of Russia has carried out step-by-step significant increases in the key rate, trying to contain inflation.

“Based on our base scenario, we are probably really close to the end of the rate hike cycle. But to a large extent, everything will depend on the situation that will occur with the stable components of inflation. And we will make a concrete decision on rates, based on the new data coming in and from the clarification of our forecast,” said Bank of Russia Chairman Elvyra Nabiullina.

The newspaper “Kommersant” commented on the next increase in the key rate as follows: “The Bank of Russia’s signal in the press release is absolutely neutral. However, it was the same in October and December 2023, therefore, in February 2024, further increases in the key rate will be excluded (for example , with a smaller step — in 25–50 bps) is no longer possible — the extent of overheating of the Russian economy is still increasing, the effect of the actions of the Central Bank in August-October remains only signs of cooling of the markets, but not cooling as such.