Nabiullina ruled out raising the key rate to 10% and above

by time news

The Bank of Russia does not see a scenario in which it will be forced to raise the key rate to 10% per annum and higher, said during a press conference the chairman of the regulator Elvira Nabiullina.

“We do not see such a scenario in the foreseeable future, which will require from us double-digit key rate values. We do not consider such scenarios, ”she said.

The last time the key rate was double-digit between December 2014 and March 2017, the regulator lowered it gradually. It was at the highest level in history from December 15, 2014 to January 30, 2015 – 17% per annum.

Earlier today, the Board of Directors of the Central Bank decided to raise the key rate by 0.25 percentage points to 6.75% per annum. Now the indicator is at the highest level since October 2019. The regulator took such a step against the backdrop of accelerating inflation and rising inflationary expectations of the population. So, in August, the consumer price index, according to Rosstat, amounted to 6.68% in annual terms – this is the maximum since August 2016. Inflationary expectations of the population (the median estimate of inflation expected by citizens in the next 12 months) in July reached a record level since November 2016. 13.4%, and in the last month of summer decreased slightly – to 12.5%, but at the same time remained “near multi-year highs”.

Nabiullina noted that in the future, the Central Bank may raise the key rate above 7% per annum. “It is too early to say that the already implemented key rate increases will certainly be enough to bring inflation back to the target, so more than one increase is possible. And it’s too early to talk about when the Central Bank may start lowering the rate, ”she said.

The signal that today’s key rate hike was not the last was given by the regulator yesterday in a press release following a meeting of the board of directors. The statement said that the Central Bank admits the possibility of further decisions regarding the increase in the indicator at the next meetings. The next meeting of the regulator on the key rate is scheduled for October 22.

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