For the first time since 2014, the Bank of Russia has gone to a sharp increase in the key rate – immediately by 1 percentage point to 6.5%. The last time the regulator sharply increased the rate in the crisis year of December 2014 due to devaluation and inflation risks – from 10.5 to 17%. The market predicted several options for raising the key rate – by 0.5, 0.75 and 1 pp. But, according to the consensus forecast of Vedomosti on July 19, nine out of 19 surveyed analysts still expected a rate hike by 1 pp. ., another five – by 0.5 pp to 6%.
The central bank is trying to take control of accelerated inflation, its goal is 4%. In June, the growth in prices reached 6.5% in annual terms and updated the maximum value since the summer of 2016. So far, inflation is not accelerating: as of July 19, it remained at the same level. The Russian economy had already reached a pre-pandemic level in the second quarter of this year and the supply was not keeping pace with the growing demand, the Central Bank explained its decision on the key rate, not excluding the possibility of its further increase. The regulator also changed its inflation forecast. At the end of the year, the forecast changed from 4.7-5.2% in April to 5.7-6.2%. The rise in prices will return to the levels of 4-4.5% only in 2022. At the same time, the Central Bank recently announced that it could revise the inflation target, including downward.