Cbank says preservation, 0.25 pp key rate hike in Dec unlikely

MOSCOW, Dec.10 (PRIME) -- It is unlikely that the central bank will keep its key rate or raise it by 0.25 percentage points in December given the latest data on Russian inflation, but the baseline scenario also does not foresee an increase of more than 1 percentage point, Central Bank Chairwoman Elvira Nabiullina told PRIME late on Thursday.

The Federal State Statistics Service said previously that Russia’s inflation sped up to 8.4% in November in annual terms from 8.13% in October.

“The forecast for the key rate until the end of the year that we issued in October assumes an increment ranging from zero to 1 percentage point. It is obvious that the latest inflation data in general means that a zero is unlikely, while a 0.25 percentage point increase is either not the most probable scenario, but we will continue looking into the data and analyzing it,” Nabiullina said.

So far, the regulator expects its December increase of the key rate not to exceed the baseline forecast of 1 percentage point, she said.

Russia’s 2021 inflation will definitely break through the upper range of the central bank’s forecast of 7.4–7.9%, but preliminary data for November shows that the consistent component of inflation has stopped growing.

“Our inflation is highly volatile at the end of the year, it has been moving in a sine curve for the past several weeks – climbing above and falling below the seasonal figures. That is why these volatile one-time factors may have an impact on the end point in December and drive inflation above the upper threshold of our forecast of 7.9%, it can happen,” Nabiullina said.

These one-time factors are not of importance for the central bank while making decisions on the key rate, it looks into consistent factors of inflation, which are above the regulator’s inflation target of 4% now. “But judging by the preliminary data for November, it looks like this consistent component of inflation has stopped growing,” she said.

End %%md/jst%%