Central bank raises key rate by 0.25 pp to 7.75% annually

MOSCOW, Dec 14 (PRIME) -- The Russian central bank has raised the key rate by 0.25 percentage points to 7.75% annually to curb inflationary risks that remain high, the regulator said in a press release on Friday.

Inflation will amount to 3.9–4.2% in 2018 and is to accelerate to 5.0–5.5% in 2019, the central bank said. In November, annual inflation accelerated to 3.8% due to higher prices for food. As of Monday, annual inflation reached 3.9%.

In the first half of 2020, annual inflation is to return to 4% when effects from the ruble’s depreciation and an increase of value-added tax (VAT) are depleted.

The central bank retained its forecast for Russia’s gross domestic product (GDP) growth in 2018 at 1.5–2.0%. In July–September, the country’s economic growth slowed to 1.5% due to a high base effect in agriculture, the regulator said.

In 2019, Russia’s economy is to grow 1.2–1.7%.

The central bank will assess feasibility of a further increase of the key rate based on the inflation and economy dynamics and taking into account external risks and financial markets’ reaction to them. The regulator’s next meeting on the key rate issue is scheduled for February 8, 2019.

End