Cbank keeps key rate at 7.25%, sees CPI above 4% for short term 2019

MOSCOW, Jul 27 (PRIME) -- The Russian central bank has retained the key rate at 7.25% over fears that the consumer price inflation can overshoot its inflation target of 4% in 2019, the authority said in a statement on Friday.

“The risk balance is skewed towards inflation. Uncertainty concerning the degree of influence of the tax measures on inflation expectations, and uncertainty over the future of the external conditions for Russia have remained,” the central bank said.

The central bank said it forecasts inflation to rise to 3.5–4.0% at the end of 2018 from 2.3% in June and 2.5–2.6% expected in July. A further short-term rise of inflation in 2019 can be caused by an increase of value-added tax (VAT), which will stimulate price rise but inflation will return to 4% at the end of 2019.

Economic growth was stronger than expected in 2017 and early 2018. The FIFA World Cup 2018 in June–July added 0.1–0.2 percentage points to the gross domestic product (GDP’s) annual rise in April–June.

The GDP is to increase 1.5–2.0% in 2018.

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