MOSCOW (Reuters) – Russia’s central bank held its key interest rate at 7.5% on Friday, keeping the need for rate hikes on the table due to inflationary risks while lowering its year-end inflation forecast by 50 basis points.
In a series of rate cuts last year, the bank gradually reversed an emergency hike to 20% made in late February following Russia’s decision to send tens of thousands of troops into Ukraine which saw the West impose wide-ranging sanctions on Moscow.
It has now held rates steady at 7.5% since the last cut in September.
Annual inflation, which spiked to over 20-year highs in 2022, slowed to 2.55% as of April 24 as last year’s base effect took hold.
But it is expected to pick up again even though the Bank of Russia lowered its year-end inflation forecast to 4.5-6.5% from 5.0-7.0%.
“Given gradually rising inflationary pressures, the Bank of Russia’s forthcoming board meetings will consider the necessity of (a) key rate increase to stabilise inflation close to 4% in 2024 and further on,” the bank said in a statement.
The decision to hold was in line with a Reuters poll, in which analysts said they expected the bank to signal its readiness to hike the cost of borrowing later this year.
Central Bank Governor Elvira Nabiullina will shed more light on the bank’s forecasts and policy in a media briefing at 1200 GMT.
The next rate-setting meeting is scheduled for June 9.
(Reporting by Reuters; Writing by Alexander Marrow; Editing by Andrew Osborn)
